Wall Street was still hesitant on Thursday, confirming a sluggish start to the year… The S&P 500 thus lost 0.34% to 4,688 pts, while the Dow Jones gained 0.03% to 37,440 pts. The Nasdaq lost another 0.56% to 14,510 pts, still weighed down by Apple, victim of a new analyst downgrade. The American markets had previously corrected on Tuesday and Wednesday with the ‘Magnificent Seven’, in particular Apple on Tuesday and Tesla on Wednesday… The trend is therefore not really improving, especially since the latest American employment figures have emerged …solid, leaving little room for maneuver for the Fed in terms of interest rates.
However, the Fed’s FOMC Minutes on Wednesday evening were somewhat reassuring, signaling the probable end of the rate hike, without specifying the timing of possible easing. According to the CME Group’s FedWatch tool, the probability of a new monetary status quo from the Fed on January 31, at the end of the next meeting, reaches more than 93%. The first easing could take place on March 20, with the probability being 62% that rates will return to a range of 5 to 5.25% on this date…
The latest ADP report on American private employment therefore showed 164,000 job creations for the month of December, against a FactSet consensus of 125,000 and a revised reading of 101,000 for the previous month… “We are returning to a labor market closely aligned with pre-pandemic hiring levels. Even if wages were not the cause of the recent surge in inflation, now that wage growth has declined, any risk of “a wage-price spiral has practically disappeared,” judges Nela Richardson, chief economist at ADP. Job creation increased for the fourth consecutive month, thanks to strong growth in hiring in the leisure and hospitality sectors. Construction held up despite high interest rates, but the manufacturing industry continued to struggle, posting another month of losses.
Small businesses with 1 to 49 employees created 74,000 jobs in December, while businesses with 50 to 249 employees created 58,000 positions. Companies with 500 people or more or generated 40,000 jobs.
The Challenger, Gray & Christmas study for December revealed announcements of layoffs affecting 34,817 jobs, compared to 44,510 a month earlier.
Unemployment claims fell more than expected last week in the United States… The US Department of Labor announced unemployment claims for the week ending December 30 at 202,000, down 18,000 compared to the previous week. previous week. The consensus was positioned at 216,000. The four-week average stands at 207,750, down 4,750. Finally, the number of unemployed people receiving compensation for the week ended December 23 stood at 1.855 million, down 31,000 over seven days (1.883 million consensus).
The final Markit US Composite PMI for December came in at 50.9, compared to the FactSet consensus of 51. The services index came out at 51.4, against the consensus 51.3. These indicators signal a slight expansion of activity in December.
On the Nymex, a barrel of WTI crude consolidated at $72.75 after its recent surge following the situation in the Middle East. The dollar index fell 0.2% against a basket of reference currencies. On the bond markets, the yield on the 2-year T-Bond is 4.37%, compared to 3.98% on the 10-year and 4.13% on the 30-year…
Operators will follow American industrial orders on Friday (consensus +1.8%), the ISM for services (consensus 52.6), and especially the monthly government report on the employment situation for the month of December (consensus 3 .8% unemployment, 160,000 non-agricultural job creations – including 130,000 in the private sector -, +0.3% for the average hourly wage compared to the previous month).
Elsewhere in the world, the Markit/JMMA December final Japanese manufacturing PMI came in at 47.9. The Markit / Caixin Chinese services index for December exceeded expectations at 52.9… The French consumer price index for December was reassuring, showing a less significant increase than expected in harmonized European data. The European services PMI indices were finally mixed. The euro zone composite index was 47.6 in final reading versus 47 consensus (48.8 for services versus 48.1 consensus). The German services index was 49.3, while the French index came in at 45.7. Services indicators were a little stronger in Italy (49.8) and Spain (51.5).
Values
Apple (-1.2%) is losing further ground, following a downgrade this time from the firm Piper Sandler from ‘overweight’ to ‘neutral’. The broker is concerned about the valuation of the Apple group and the context of sectoral and macroeconomic weakness for the first half of 2024. “Piper” is cautious on semiconductors, estimating that the first half will be difficult for the analog market , mobile phones and consumer end markets. Concerning Apple, the research firm is concerned about device inventories at the start of the year and also judges that growth rates have reached a peak in terms of unit sales. The deterioration of the macroeconomic environment in China could also weigh.
This is therefore a new sanction for Apple, already the day before yesterday of a downgrade from Barclays. The broker was then concerned about the potential slowdown in demand for the iPhone and revised its recommendation to ‘underweight’, while adjusting its target from $16 to $160.
Mobileye drops by 24.5% and weighs on the automotive chip sector on the stock market. The autonomous driving technology group has warned of a fall in orders from customers clearing excess inventory, which is expected to weigh on results this year. The Israeli group provides 2024 revenue guidance ranging from 1.83 to 1.96 billion dollars, against 2.6 billion consensus. The 2024 operating loss is anticipated between $378 and $468 million, much heavier than the previous year. The group estimates an oversupply of 6 to 7 million units for its advanced driving assistance chip, EyeQ, its most sales-generating product, which should have a very heavy impact on the first quarter with a drop by half in sales. income.
Microsoft (-0.7%) is further accelerating in artificial intelligence with the upcoming introduction of a new keyboard key dedicated to Windows Copilot… This would be the first major update of Windows PC keyboards in thirty years! Pressing the Copilot key would then allow Microsoft’s AI assistant to search for content on the Internet, for example, or to search in your own content. Thus, the Copilot would act as an intelligent personal assistant. Microsoft has not specified which would be the launch partners of this Copilot key… Note that Microsoft is only 2% of the market value of Apple, the world’s largest capitalization.
PepsiCo (-0.8%) remains under surveillance on Wall Street, while the French group Carrefour has stopped selling American products due to prices deemed “unacceptable”. Carrefour thus indicated to its customers that it would no longer sell PepsiCo products such as Pepsi, but also Lay’s and 7up products, which had become too expensive. The Reuters agency refers to this as a “fierce fight over prices between retailers and global food giants”. Starting Thursday, PepsiCo product shelves in Carrefour stores in France will be accompanied by a notice saying the French retailer is no longer selling the brand “due to unacceptable price increases”, a Carrefour spokesperson said , cited by Reuters.
Meta (+0.7%). The boss of the American social media giant, Mark Zuckerberg, sold nearly half a billion dollars worth of Meta Platforms shares during the last two months of 2023, Bloomberg indicates. The CEO of Meta sold securities on a regular and daily basis between November 1 and December 29. He sold a total of 1.28 million Meta shares for $428 million. Bloomberg, citing statements provided Tuesday, says that on average, each sale brought in $10.4 million for the executive. Before these sales, Zuckerberg had not sold Meta titles since November 2021. The title had hit a seven-year low at the end of 2022, with operators then worried about the massive costs of the Metaverse. The stock market rebound was then brutal, with a tripling of the stock price last year… Zuckerberg holds around 13% of Meta’s capital.
Walgreens Boots Alliance (-5.1%), the American pharmacy chain exceeded market expectations for its first fiscal quarter of 2024. The group, however, lowered its quarterly dividend by 48% to 25 cents per share in order to preserve its cash flow. . The Deerfield, Illinois-based group posted adjusted earnings per share of 66 cents for the quarter, compared to a consensus of 61 cents. The chain has cut staff and expenses, closing some unprofitable locations. First-quarter sales increased 10% year-over-year to $36.7 billion. Growth at constant currencies reached 8.7%. The group maintains its 2024 adjusted EPS guidance ranging from $3.20 to $3.50.
RPM International (-3%), the American construction materials specialist announced record revenues of $1.79 billion for its second fiscal quarter of 2024, up slightly year-on-year, for historic net profit of $145.5 million dollars and diluted EPS of $1.13. Ebit is also historic for the period at $220.9 million. Adjusted earnings per share were $1.22, while adjusted EBIT reached $236.9 million, an increase of 10.4%. The consensus was for $1.22 adjusted EPS on $1.84 billion in revenue. The group therefore disappoints despite the very high level of its results. The forecasts are also cautious. For its third fiscal quarter, the group expects stable sales and adjusted Ebit growth of 25-35%.
Conagra Brands (-1.9%) lowered its forecast for organic sales and profit growth for fiscal 2024. The group warns of a slower-than-expected recovery in demand for its packaged meals and snacks. The group, known in particular for its Slim Jim beef jerky, also missed the revenue consensus for the quarter ended, its second fiscal quarter. The group saw volumes of its ready-to-eat meals and frozen snacks fall, with the question of price appearing to be decisive given persistent inflation. For the second quarter, sales declined 3.2% year-over-year, with an organic decline of 3.4%. Operating margin for the quarter ended November 26 fell 261 basis points to 14%. Adjusted earnings per share were 71 cents, down 12%.
Conagra now expects annual net product sales to decline between 1% and 2% organically, compared to its previous forecast of growth of around 1%. The adjusted annual operating margin is anticipated at 15.6%. The group finally envisages adjusted annual earnings per share of between $2.60 and $2.65, compared to a previous range of $2.70 to $2.75.
Lamb Weston (+0.3%), the world’s leading processor of frozen fries, a subsidiary of ConAgra, however, is climbing on Wall Street today following its quarterly publication. For the second fiscal quarter, the group achieved revenues up 36% to $1.73 billion, operating profit up 12% to $306 million and net profit more than doubled to $215 million. Diluted earnings per share increased 108% to $1.48, while adjusted EPS rose 15% to $1.45. For the 2024 financial year, the group maintains revenue guidance ranging from $6.8 to $7 billion, but increases its net profit guidance to between $830 and $900 million. Annual adjusted EPS is now expected to be between $5.70 and $6.15…
