Another hesitant day on the American market, while operators’ attention is now focused on the quarterly results of US groups. The S&P 500 returns 0.22% to 5,011 pts, while the Dow Jones advances 0.06% to 37,775 pts. The Nasdaq lost 0.52% to 15,601 pts.
The robustness of the latest US data and persistent inflation have forced traders to moderate their bets on upcoming interest rate cuts from the Federal Reserve… A revision of expectations further reinforced this week by the latest statements from Jerome Powell , as well as the macro figures of the day. Investors also commented on the interventions of other members of the Fed: The President of the New York Fed, John Williams, declared that there was “no rush to lower rates”. Asked about the possibility of an increase, he replied that “that was not his basic expectation”, but added that it was possible if the data justified it, to achieve the inflation target…
The CME Group’s ‘Fedwatch’ tool now gives a probability of 84.8% to a new Fed status quo in June, whereas a reduction for this meeting was considered almost certain just a few days ago. “Most of the data this week shows the economy is still firing on all cylinders,” Chris Larkin at Morgan Stanley’s E*Trade told ‘Bloomberg. “This is going to pose a challenge to the Fed’s rate cut plans.” “Consistent with recent comments from Fed Chairman Jay Powell, we believe the most likely course of action is for the Fed to keep rates where they are for the moment,” said Brian Rose at UBS Global. Wealth Management. “If inflation slows in line with our baseline forecast, the Fed should be ready to cut rates by September.”
On the micro side, publications from Netflix, Blackstone and Intuitive Surgical are particularly scrutinized.
Crude oil is at $84.50 per WTI on the Nymex. On the bond market, rates are tightening again with the ten-year Treasury yield increasing by 4.1 basis points to 4.629%. The dollar index stabilizes against a basket of currencies and the euro loses 0.1% against the greenback at $1.0640 between banks. Bitcoin rebounds to $62,480. Finally, gold rose 0.5% to $2,378 per ounce, close to its historic highs.
Values
* Blackstone stumbles by 2.3%, sanctioned after an unconvincing publication. The world’s largest private equity firm saw its distributable profits rise 1% year-on-year to $1.27 billion, or 98 cents per share, compared with a consensus of 96 cents. Growth in fee-related profits partially offset lower revenues from asset disposals. Blackstone, whose assets under management increased by 7.1% to $1.06 trillion, is a major indicator of the health of financial markets. Fee-related profits, which Blackstone earns from its lucrative management and advisory fees, rose 12% to $1.2 billion.
* Oracle (-2.2%) will invest more than $8 billion in Japan over the next 10 years to meet demand for cloud computing and artificial intelligence infrastructure. Oracle said it would “significantly expand operations and support engineering teams with staff based in Japan.” “We are committed to supporting our customers and partners where they are on their cloud journey,” said Toshimitsu Misawa, board member and president of Oracle Corporation Japan. “By increasing our cloud footprint and providing a team to support sovereign operations in Japan, we are giving our customers and partners the opportunity to innovate with AI and other cloud services while meeting their regulatory requirements and sovereignty.
* Micron Technology (-3.7%) will receive more than $6 billion in subsidies from the US Department of Commerce to finance chip factory projects, reported ‘Bloomberg News’.
* Taiwan Semiconductor Manufacturing returns 6.7% despite stronger than expected results… The world’s largest chip manufacturer, and one of the main suppliers to Apple (-0.5%) and Nvidia (+0 .7%) lowered its outlook for chip market expansion, warning that the smartphone and personal computer markets remain weak. “Macroeconomic and geopolitical uncertainty persists, potentially weighing on consumer confidence and end-market demand,” the company’s CEO, C. Wei, said in a conference call. This outlook overshadowed the Asian giant’s strong quarter. The company saw its net profit increase by 9% to 225.5 billion Taiwan dollars ($7 billion) in the first quarter, for a turnover of $18.87 billion. The group beat market expectations thanks to soaring demand for semiconductors used in artificial intelligence applications. TSMC expects its revenue to increase by around 30% in the current quarter, or between $19.6 billion and $20.4 billion versus a consensus of $19.1 billion.
* Alaska Air Group (+4%) had a better quarter than expected and revealed strong guidance for the current quarter, thanks to strong travel demand and expectations of a strong summer season. The airline, which the world heard a lot about after one of its planes lost a fuselage panel in mid-flight, leaving a rectangular hole in the cabin of a 737 MAX 9, suffered a net loss of 132 million dollars, or $1.05 per share, in the first quarter, compared to a deficit of $142 million or $1.11 per share a year earlier. Its operating revenue increased 1.6% to $2.23 billion. The Seattle-based airline would have reported an adjusted profit of about $5 million without the $162 million impact from grounding the 737 MAX 9 for more than two weeks
To repair the financial damage, Alaska Air received initial cash compensation of $162 million from Boeing, which was excluded from its first quarter results. Alaska Air expects second-quarter earnings of between $2.20 and $2.40 per share, compared with analysts’ average estimate of $2.12. “Through thoughtful capacity planning, network optimization and diligent cost control, we are well positioned to continue our strong performance in the second quarter and beyond,” said CEO Ben Minicucci.
* DRHorton (stable). The US homebuilder raised its full-year revenue forecast as limited US housing supply boosts sales. The company now plans to deliver between 89,000 and 91,000 homes, compared to a previous estimate of 87,000 to 90,000 units. Revenues are anticipated between $36.6 and $37.7 billion compared to $36 to $37.3 billion previously. Housing orders for the three months ended March rose 14% from a year earlier, in line with expectations. Although inflation and mortgage rates remain high, “we are well positioned with our affordable product offerings and flexible lot offering,” the company said. The firm recorded an EPS of $3.52 in its second quarter compared to $2.73 a year earlier and a consensus of $3.07. Revenues rose 14% to $9.11 billion, above analysts’ expectations.
* Discover Financial Services (+3.6%) reported a 68% drop in profit in the first quarter, linked to increased provisions for non-performing loans. The group’s encouraging outlook supports the price, which advances 1.1% before the opening.
* United Airlines (+5.5%) has reached an agreement with Boeing to be compensated for financial damage linked to safety problems on the group’s aircraft. The company said in a statement that a confidential agreement with Boeing would provide it with “credit notes” for future purchases to offset damages related to the plane’s grounding and rescheduling of deliveries. A “credit note” is an official written acknowledgment that money is owed to a customer.
* Alcoa (-0.2%) announced an adjusted quarterly loss of 81 cents per share for the quarter ended in March, compared to a loss per share of 23 cents last year.
* KeyCorp (-0.3%) reported a 33.5% drop in first-quarter profit as its net interest income was eroded by rising deposit costs and high interest rates held borrowers away. Net interest income (NII) – the difference between what a bank earns on its loans and what it pays on its deposits – fell 20% to $886m, in line with expectations. EPS from continuing operations came to 20 cents compared to 30 cents a year earlier and 21 cents expected. The bank kept unchanged its forecast of a drop in the NII between 2% and 5% in 2024, against a consensus of -3.4%.
