Wall Street is now back in the green this Wednesday, the day after a delicate session marked by a fall of 0.95% in the Nasdaq with Tesla and a drop of 1% in the Dow Jones. The S&P 500 recovered by 0.35% to 5,224 pts, the Dow Jones gained 0.22% to 39,256 pts and the Nasdaq gained 0.48% to 16,318 pts. On the Nymex, a barrel of WTI crude gained 0.7% to $85.7. An ounce of gold rose 1% to $2,304. The dollar index lost 0.3% against a basket of currencies.
Job creation in the United States in the private sector for the month of March stood at 184,000 according to ADP, compared to a FactSet consensus of 150,000 and a level of 155,000 a month earlier, in revised reading. The previous reading for February was 140,000. “The month of March was surprising not only in the wage increases, but also in the sectors that recorded them. The three largest increases for job changers were in construction, financial services and “manufacturing industry. Inflation has slowed, but our data shows that wages are increasing, both in goods and services,” says Nela Richardson, chief economist at ADP.
The final US composite PMI for March came in at 52.1, compared to 52.2 consensus and 52.2 also for its preliminary reading. The final services indicator was confirmed at 51.7, in line with the preliminary reading. These indicators thus signal a slight expansion in national activity and that of services for the past month.
The ISM American services index for March 2024 stood at 51.4, compared to the FactSet consensus of 52.8 and 52.6 a month earlier. The index, above 50, therefore signals a modest expansion of activity in services.
Oil prices are still rising this mid-week. Unsurprisingly, the Joint Ministerial Monitoring Committee (JMMC) of OPEC and its allies recommended leaving the cartel’s production policy unchanged at the end of its meeting on Wednesday. Reductions by the Organization of the Petroleum Exporting Countries and its partners (-2.2 million barrels), combined with surprisingly resilient fuel demand, helped push crude prices to nearly $90 per barrel , the highest level since the end of 2023. The ongoing conflict in the Middle East is also supporting prices.
By keeping restrictions in place, OPEC+ appears set to ensure that global oil markets remain slightly in deficit during the second quarter, according to the International Energy Agency in Paris. This deficit could push oil prices towards $100 per barrel, JPMorgan Chase & Co warned yesterday. This decision could also complicate the work of major central banks seeking to ease their monetary policy after having fought hard against galloping inflation. On the other hand, it should satisfy Saudi Arabia which needs a high crude oil price to fill its coffers. The entire OPEC+ alliance, made up of 22 countries, will meet in early June at its headquarters in Vienna to decide whether to continue supply cuts in the second half of the year.
Note also that the weekly report from the US Department of Energy for the week ended March 29 showed crude stocks increasing by 3.2 million barrels compared to the previous week, and gasoline stocks falling. by 4.3 million barrels and stocks of distilled products down by 1.3 million barrels.
Michelle Bowman, John Williams, Loretta Mester and Mary Daly from the Fed spoke yesterday. Bowman limited his comments to banking regulation, without addressing the topic of monetary policy. Nor did Williams address the crucial issue of rates.
The Fed is still on track to cut interest rates this year, but new data is needed according to Mester, who votes on the Monetary Policy Committee and runs the Cleveland office. If the economy performs as expected, Mester believes it will be appropriate to begin lowering rates later this year as inflation continues to slow toward 2 percent, and even if the job market and growth economic remains strong. Mester thus mentioned yesterday a potential gradual reduction in rates, while the next data on inflation must reflect the forecasts of an appeasement to begin the cycle of monetary easing. However, the official does not expect to have enough information by the next FOMC meeting to decide, and adds that the risks of premature easing outweigh those of keeping the status quo too long.
Mary Daly, also a FOMC voter and head of the San Francisco chapter, said she saw no urgency in adjusting rates. She observed that as inflation fell, the path was fraught with challenges.
The Fed must wait until the fourth quarter to begin lowering rates, said today the president of the Atlanta branch, Raphael Bostic, who is counting on only one rate cut this year. He points out on CNBC that inflation has become much more irregular. “If the economy performs as I expect, that is, GDP and employment remain strong and inflation slowly declines over the course of the year, it would be appropriate to begin reducing interest rates. interest at the end of the year,” Bostic ruled.
Still on the Fed side, Michelle Bowman, Austan Goolsbee, Michael Barr, Adriana Kugler and especially Jerome Powell speak this Wednesday, while Patrick Harker, Thomas Barkin, Goolsbee, Mester and Kathleen O’Neill Paese, Alberto Musalem, Neel Kashkari and Adriana Kugler will speak on Thursday. Susan Collins, Thomas Barkin, Lorie Logan and Michelle Bowman will be there on Friday… Powell is scheduled to speak this evening about the outlook for the economy at the Stanford Business, Government & Society Forum in California.
Economists still believe a rate cut in June is more likely than not. The Fed’s next monetary policy meeting is scheduled for April 30 and May 1. At the end of the March meeting, monetary officials left the ‘fed funds’ rate target unchanged in a range of 5.25% to 5.5% and confirmed that they were still planning three rate cuts this year.
The monthly report on the employment situation in the United States for the month of March will be known on Friday (consensus 3.9% unemployment, 205,000 non-agricultural job creations and 170,000 in the private sector).
In news from companies listed on Wall Street, Acuity Brands, Levi Strauss and BlackBerry publish their accounts today. Lamb Weston, RPM International and ConAgra Brands will announce their results tomorrow.
Values
Intel (-7%) reported increased operational losses on its foundry business, with an operating deficit of $7 billion for 2023 compared to $5.2 billion a year before. Revenue from the business fell 31% to $18.9 billion in 2023. Pat Gelsinger, the group’s chief executive, cited various bad decisions that weighed on results, including the one against ASML’s EUV machines , certainly expensive, but effective in terms of costs compared to other tools. The processor giant has now moved to EUV tools. Gelsinger believes, quoted by Reuters, that “before EUV, we bore a lot of costs and were not competitive.” Intel also plans to spend $100 billion to build or expand factories in four US states. The business recovery plan will depend on its ability to persuade companies to use its manufacturing services.
Cal-Maine Foods (+4%), the American giant in the production, marketing and distribution of fresh eggs, climbs to the highest level in its history on Wall Street, following its quarterly publication. For its third fiscal quarter 2024, ended in early March, the group posted revenues of $703 million, net profit of $146 million and diluted earnings per share of $3. The group particularly mentions historical sales volumes. The profit, however, is down compared to the record of $323 million for the third quarter of 2023, while the average net selling price per dozen fell by 41% to $2.152 on conventional eggs. The average net selling price per dozen on specialty eggs was $2,415, down 8%. The group clearly exceeds the consensus for the closed quarter in terms of sales and earnings per share, despite the decline in gross margin to 31.1% compared to 46.4% a year before.
Paramount Global (stable). According to the New York Times, discussions are underway between the American entertainment giant and Skydance, David Ellison’s media company, with a view to a potential operation. The Reuters agency had already indicated in January that Ellison was studying a cash offer for the acquisition of National Amusements, Paramount’s parent company. The NYT reported today that David Ellison, founder of Skydance, met with Paramount’s board of directors at the end of last month to discuss a transaction. Thus, Paramount, which owns the film studio Paramount Pictures, as well as other flagship assets such as CBS, MTV and Nickelodeon, would have considered entering into exclusive negotiations with Skydance regarding a potential deal. The NYT cites four sources with knowledge of the discussions on this subject. Entering into exclusive negotiations would be a major step, while other major investors are coveting Paramount. The private equity firm Apollo Global Management has offered $11 billion for Paramount Global’s Paramount Pictures film studio.
The film studio is considered the crown jewel of the Paramount media conglomerate. This studio has attracted the interest of many suitors. Shari Redstone, majority shareholder of the conglomerate via National Amusements, is reluctant to part with the studio acquired by her father, the late Sumner Redstone, thirty years ago. The Financial Times reported a few days ago that Redstone was not convinced by Apollo’s offer and was instead negotiating a deal with billionaire David Ellison. Thus, the CEO of Skydance Media, Ellison, would therefore be in talks to acquire National Amusements, the holding company of the Redstone family, in order to take control of Paramount Global.
Tesla (stable) stalled yesterday on Wall Street, with quarterly sales well below expectations. In the first quarter, the electric vehicle manufacturer produced just over 433,000 vehicles and delivered around 387,000 vehicles. Specialists anticipated nearly 450,000 units delivered and 453,000 produced. This Wednesday, Bloomberg calculates, based on figures from China’s Passenger Car Association (CPCA), that faced with unprecedented competition and the weakening of Chinese consumer morale, the local market share of Musk’s group would have fallen at around 6.7% in the December quarter, compared to 10.5% in the first quarter of last year. Although the Chinese CPCA has not yet provided details on the number of vehicles leaving Tesla’s Shanghai factory and shipped locally in March, figures for the first two months of the year also show that the Texas manufacturer’s share on the Chinese market would have fallen to around 6.6%, adds the agency.
Walt Disney (stable) would have obtained enough shareholder votes to defeat the plans of the hedge fund Trian Fund Management of Nelson Peltz and the activist fund Blackwells which are demanding seats on the board of directors, indicates Reuters, citing sources having knowledge of the file.
