Wall Street corrects this Tuesday, following an already depressed session yesterday. The S&P 500 now drops 0.95% to 5,194 pts, the Dow Jones 0.98% to 39,177 pts and the Nasdaq 1.45% to 16,158 pts. On the Nymex, a barrel of WTI crude gained 1% to $84.6. An ounce of gold advances 1.2% to $2,284. The dollar index lost 0.3% against a basket of currencies.
Yesterday Monday, the final American manufacturing PMI index for the month of March stood at 51.9 against 52.5 consensus, while the ISM manufacturing index was 50.3 against 48.5 for the average forecast of economists. Construction spending for the month of February declined by 0.3% compared to the previous month against +1% consensus.
Fed Governor Lisa Cook, speaking yesterday, did not comment on economic or monetary policy.
This Tuesday, American industrial orders for the month of February 2024 grew by 1.4% compared to the previous month, against +1% consensus and -3.8% a month earlier, in revised reading.
Job openings in the United States for the month of February 2024 stood at 8.756 million according to today’s JOLTS report, practically in line with the consensus of local economists, compared to a revised level of 8.75 million for month of January.
Michelle Bowman, John Williams, Loretta Mester and Mary Daly from the Fed speak today. Bowman limited his comments today to banking regulation, without addressing the topic of monetary policy.
Note also that the final euro zone manufacturing PMI indices for the month of March announced this morning came out as expected in contraction territory (46.1 for the final euro zone index against 45.7 FactSet consensus; 41.9 in Germany against 41.6 consensus). The final UK manufacturing PMI for March was 50.3 versus the consensus 49.9.
Among the other major economic meetings of the week on Wall Street, investors will follow tomorrow Wednesday the ADP report on private employment for the month of March, as well as the final composite PMI index for March and therefore its component of services. The monthly report on the employment situation in the United States for the month of March will be known on Friday (consensus 3.8% unemployment, 205,000 non-agricultural job creations and 165,000 in the private sector).
On the Fed side, Michelle Bowman, Austan Goolsbee, Michael Barr and Adriana Kugler speak tomorrow Wednesday, Patrick Harker, Thomas Barkin, Goolsbee, Loretta Mester and Kathleen O’Neill Paese, Alberto Musalem and Adriana Kugler Thursday, then Susan Collins , Thomas Barkin, Lorie Logan and Michelle Bowman on Friday.
In the news of companies listed on Wall Street, PVH therefore delivered a warning on sales last night. Paychex and Cal-Maine Foods announce their quarterly financial results on Tuesday. Acuity Brands, Levi Strauss and BlackBerry release Wednesday. Lamb Weston, RPM International and ConAgra Brands announce Thursday.
Values
Paychex (stable). The American group specializing in payroll management has published its accounts for the third fiscal quarter. Over the period, revenues rose 4% to $1.44 billion, while operating profit rose 6% to $650 million. Adjusted diluted earnings per share rose 7% to $1.38. The consensus was $1.37 in quarterly adjusted EPS for $1.46 billion in revenue. For the financial year, the group is now counting on revenues increasing by 5 to 6%.
Trump Media & Technology Group (+4%) merged entity born from the merger of Digital World Acquisition and Trump Media, which therefore owns Donald Trump’s social network Truth Social, fell again last night by 21.5% on the American rating, after its sharp rise following the first steps a week ago on the Nasdaq. Remember that its market valuation reached nearly $10 billion last week. The return to reality is quite brutal, however, and this capitalization is already back below 7 billion, following a declaration to regulators in which Trump Media revealed revenues of only… 4 million dollars over the last year for a net loss of nearly $60 million. In addition, the group anticipates further financial losses. The file therefore appears extremely overvalued on the stock market, compared to traditional financial ratios.
PVH (-23%), American fashion group with brands Calvin Klein, Van Heusen and Tommy Hilfiger, plunges on Wall Street following its warning. Thus, the group delivered last night an annual sales guidance lower than expectations, due in particular to the weakness in Europe. Annual revenues are expected to decline by 6 to 7%, after an increase of 2% in 2023. Part of the decline (2%) is attributable to the sale of Heritage Brands, but the group therefore also mentions the environment difficult economy, particularly in Europe. PVH is also suffering from the loss of momentum of its flagship brands Calvin Klein and Tommy Hilfiger, which fell behind in the fourth quarter. For the fiscal fourth quarter, revenues were $2.49 billion, flat year-over-year, while adjusted earnings per share were $3.72.
Over the current financial year, the group is also planning a stable operating margin compared to 10.1% in 2023. Annual earnings per share are expected between $10.75 and $11.
General Electric has finalized its split into three entities. The group’s aeronautical and energy activities thus begin their separate listings on the NYSE this Tuesday, a little over a year after the listing of the healthcare activity on the Nasdaq. The split of the conglomerate was initially announced at the end of 2021. Larry Culp, now CEO of GE Aerospace, will ring the opening bell on Wall Street today with Scott Strazik, CEO of Vernova, who represents the energy activities. The ticker symbol for GE Aerospace is ‘GE’ (+1%), while that of GE Vernova is ‘GEV’ (+3%).
Tesla (-6%!), the Texan manufacturer of electric vehicles, fell this Tuesday on Wall Street. The group has just revealed more than mixed delivery figures for the first quarter. Over the period, the electric vehicle manufacturer produced just over 433,000 vehicles and delivered around 387,000 vehicles. This is even lower than the latest consensus of specialists, which stood at nearly 450,000 total units delivered after numerous downward revisions – including 427,000 on the Model 3 / Y. The group had delivered 484,507 EVs in the previous quarter and 422,875 a year ago. Tesla also largely missed the consensus in terms of production (453,000 Bloomberg consensus).
Rivian (-5%) also missed – but less significantly – the quarterly production consensus, with the transition to new suppliers. The group indicated that it had produced 13,980 units in the first quarter, ended at the end of March, while the consensus exceeded 14,000. Quarterly production still increased by around 50% year-on-year. In the fourth quarter of 2023, Rivian had produced just over 17,500 units. Rivian also reported 13,588 deliveries over the quarter, a decline of 3% compared to the previous quarter, but a performance higher than the group’s latest guidance.
Canoo (-32%!), the small American automobile manufacturer of electric vehicles, has warned of substantial doubts about its ability to continue its activity, following 2024 revenue forecasts lower than expectations.
SLB (-2%), formerly Schlumberger, announced the planned acquisition of its oil services rival ChampionX (+9%) for approximately $7.8 billion in an all-stock transaction . Once the transaction is finalized, ChampionX shareholders would own approximately 9% of SLB’s common stock. The deal offered ChampionX shareholders a premium of nearly 15% based on yesterday’s closing prices. The deal will strengthen the scope of SLB’s activities and its position in North America. Under the terms of the deal, ChampionX shareholders would receive 0.735 SLB shares for each of their shares. The transaction is expected to be finalized by the end of the year. SLB also announced its intention to return $7 billion to its shareholders over the next two years, including $3 billion this year.
UnitedHealth (-7%), CVS Health (-9%) and other American health insurers are suffering on the stock market, while the Centers for Medicare & Medicaid Services reported unchanged reimbursement levels on Medicare Advantage plans. Humana also stumbles by more than 14%.
