Wall Street has been accelerating for several moments, following reassuring US inflation figures and while waiting for the Fed. The S&P 500 soared by 1.15% to 5,437 pts and the Nasdaq by 1.73% to 17,643 pts, while the Dow Jones gained 0.52% to 38,951 pts. The S&P and the technology composite index thus reach new historic highs.
The Big Three of “tech”, Microsoft, Apple and Nvidia, also remain under surveillance, while the title of the Apple group has just skyrocketed following the AI announcements on Monday at the WWDC conference in Cupertino. The three files added together amount to 10,000 billion dollars!
Finally, operators will follow tomorrow the vote of Tesla shareholders on Elon Musk’s very juicy $56 billion compensation package…
On the Nymex, a barrel of WTI crude rose 0.5% to $78.3. An ounce of fine gold rose 0.6% to $2,341. The dollar index is now down 0.9% against a basket of currencies.
The American consumer price index for May 2024 was stable compared to the previous month, against a consensus of +0.1% and after an increase of 0.3% in April. Over one year, the consumer price index shows an increase of 3.3%, compared to a consensus of 3.4%. Excluding food and energy, the CPI increased by 0.2% month-on-month and 3.4% year-on-year, compared to +0.3% and +3.5% consensus respectively. The average hourly wage increased as expected by 0.4% in May, compared to the previous month.
Oil prices are reducing their advance after the announcement of a surprise increase in crude reserves in the United States last week. According to the US Department of Energy, domestic crude stocks, excluding strategic reserves, increased by 3.7 million barrels during the week ended June 7 to 459.7 mb. The consensus was for a drop of 1.2 mb. Stocks of gasoline increased by 2.6 mb (vs. 0.25 mb of consensus), and those of distilled products increased by 0.9 mb (vs. +0.5 mb expected).
Operators will also follow the American budgetary balance at 8 p.m., as well as of course the Fed’s monetary press release followed by Jerome Powell’s press conference.
The CME Group’s FedWatch tool gives a more than 99% probability of a new monetary status quo, leaving rates unchanged between 5.25 and 5.5%, at a 23-year high. The probability of status quo on July 31, after the next meeting, reaches more than 85% (compared to 91% before publication of inflation figures). That of a first monetary easing no later than September 18 is around 70% (53% before the CPI announcement). Note also that political pressure is mounting on Jerome Powell to quickly lower rates, whether from Donald Trump – who indicated during an interview that he “knows a lot about how to fire people” – or from the clan Democrat.
The markets will be monitoring this evening the Fed’s famous “dot plot”, which presents central bankers’ rate expectations in the form of a dot graph.
Tomorrow, investors will be attentive to weekly unemployment claims, as well as the producer price index for the month of May. John Williams, head of the New York Fed, will also speak during the day. Finally, on Friday, the markets will follow import and export prices, the American consumer sentiment index from the University of Michigan, as well as a speech from Austan Goolsbee, who heads the Chicago Fed .
In business news, Oracle stands out with strong growth, while the group displays very exciting prospects with the rise of AI. Apple, for its part, recorded a historic peak, also boosted by the integration of AI tools into its devices.
Casey’s General Stores (+17%!) announced its accounts last night after trading on Wall Street. Broadcom publishes this evening, while Adobe reveals its latest figures tomorrow, after the close of the American market.
Values
Oracle jumps 10% on Wall Street. For the closed quarter, the American software group revealed revenue growth of 3.3% to $14.3 billion, slightly below consensus, while its adjusted earnings per share also narrowly missed estimates. of brokers, at $1.63. However, the title is expected today at an all-time high on the American market! Revenue from the cloud unit that rents its computing and storage power, however, soared 42% to $2 billion, above expectations. Also, and importantly, Oracle reported that total remaining “performance obligations”, a measure of future contractual sales, had increased by…44% to $98 billion at the end of May, much higher than the consensus of $74 billion.
Indeed, during the last two quarters, Oracle signed the “largest sales contracts in its history, with enormous demand for training large AI language models in Oracle Cloud,” said CEO Safra Catz. Revenue growth is therefore expected to reach double digits in the current financial year ending May 2025, fueled by strong demand for artificial intelligence workloads. This growth is expected to accelerate throughout the year as cloud unit capacity begins to catch up with demand! Oracle also announced a new agreement to make its database available on Google’s cloud infrastructure. A similar agreement with Microsoft, announced at the end of 2023, should boost the growth of the cloud database. Additionally, popular Microsoft-backed startup OpenAI will use Oracle’s cloud infrastructure for “additional capacity.” Oracle’s cloud thus confirms its success with generative AI startups, also with Elon Musk’s xAI, which continues to gain momentum. “The world’s largest cloud computing companies and the world’s most successful and accomplished AI companies choose to use Oracle Cloud services and data centers,” said Larry Ellison, president. Finally, Catz claimed that the cloud infrastructure unit would see growth of more than 50% for the fiscal year…
Apple gains even more than 4%, at the highest level in its history for a capitalization of 3,320 billion dollars, following the AI announcements at the WWDC conference which had already propelled the value by 7.3% yesterday. Thus, if the increase holds, Apple would once again become the world’s largest capitalization this evening ahead of Microsoft and Nvidia. Tim Cook’s group was considered to be late in the field of artificial intelligence, facing Microsoft, and even Meta or Alphabet. The WWDC announcements, including an OpenAI partnership and new “Apple Intelligence” tools, were not initially convincing, since the title corrected on Monday. But yesterday, many brokers delivered an optimistic interpretation of the latest developments from the Apple group. Some see these new AI tools as the catalyst for a new “supercycle” of growth for Apple, particularly in smartphones… The Cupertino group thus gained $200 billion in market capitalization in one day, this which almost seems to become the norm for technological “megacaps”, after comparable rallies from Nvidia or Meta.
Nvidia, the AI star on Wall Street, gained more than 4%, driven in particular by the solid prospects of Oracle. Microsoft gives itself 1%.
Paramount (stable) lost 7.8% on the American market yesterday, while Shari Redstone, who controls the group via National Amusements, put an end to merger negotiations with Skydance Media. According to the Wall Street Journal, Redstone should pursue a sale of National Amusements alone rather than studying a merger of Paramount with another player. Edgar Bronfman Jr. and Steven Paul are reportedly interested. An independent special committee previously recommended the Skydance deal, to no avail. National Amusements said in a statement that it had not reached a mutually acceptable agreement regarding a potential transaction with Skydance to acquire a controlling interest in NAI. National Amusements says it intends to “continue to support and explore opportunities to drive value creation for all Paramount shareholders.” Skydance, which notably collaborated with Paramount on ‘Mission Impossible’ and ‘Top Gun: Maverick’, posted a final proposal at $8 billion, including the purchase of a controlling share in NAI for around $2 billion according to CNBC.
FedEx (stable) intends to cut 1,700 to 2,000 back-office jobs in Europe, the package delivery group said. The cuts will be carried out over a period of 18 months. FedEx estimates a pre-tax cost ranging from $250 million to $375 million, and estimates that the job cuts will save $125 million to $175 million on an annualized basis starting in fiscal 2027. Recall that the group has launched a spending reduction campaign due to low freight demand and pressured margins. The Memphis group intends to reduce its ongoing costs by $4 billion by the end of fiscal 2025. In March, the group still published profits well above expectations, despite a 2% drop in revenue. at $21.7 billion. The group had also tightened its earnings estimates, expecting for the 2024 financial year a profit ranging from $17.25 to $18.25 per share.
Best Buy (+1%), the American distributor of electronic products, carried out an additional wave of layoffs and restructuring last week, ‘The Verge’ understands, citing sources close to the matter. Remember that the group announced last month for its first fiscal quarter 2025, revenues totaling 8.85 billion dollars compared to 9.47 billion a year before. Adjusted diluted earnings per share were $1.20 compared to $1.15 a year earlier. Best Buy’s full-year forecast ranges from $41.3 billion to $42.6 billion in revenue, with comparable sales down 0 to 3 percent, and for adjusted earnings per share ranging from 5.75 to $6.20.
GameStop (+2%) has just completed a new fundraising of $2.14 billion, taking advantage of the current appeal of ‘meme stock’ enthusiasts on Wall Street. Citron Research indicated for its part that it no longer had a short selling position on the stock. “Citron is no longer short GME. It’s not because we believe a turnaround in the company’s fundamentals will ever happen, but with $5 billion in the bank they have plenty of room to run to appease their shareholder cult Although Wedbush has set a target of $11 today, we respect the irrationality of the market. After all, Dogecoin remains a $20 billion entity. number of actions could temper the crowd’s mentality, Citron will look aside for the moment,” Citron Research clarified on the social network X.
Tesla (+3%) is rising, on the eve of the shareholder vote on Elon Musk’s $56 billion compensation package. Note also that an institutional shareholder accuses Musk of having pocketed billions of dollars by selling Tesla shares using insider information. Citi, for its part, anticipates Tesla second-quarter deliveries lower than market expectations, around 400,000 compared to the consensus 444,000, with weak demand in Europe and the United States. Finally, the European Commission will impose additional customs duties on imports of electric vehicles from China, following an investigation opened in October into subsidies granted by Beijing to Chinese manufacturers.
