Wall Street recovered well on Monday, awaiting a new series of quarterly publications, and while Joe Biden has just left the presidential race… The S&P 500 gained 1.08% to 5,564 pts, while the Dow Jones advanced 0.32% to 40,415 pts. The Nasdaq rebounded 1.58% to 18,007 pts! Joe Biden therefore announced on Sunday that he was ending his re-election campaign. In a statement published on social networks, the American president assured that he would remain in office at the White House until the end of his term in January 2025, wishing to concentrate on his presidential duties. The markets welcomed the news rather positively as his state of health was worrying, offering a technical boost after a rather trying week – particularly for major technology stocks.
On the Nymex, the barrel of WTI crude fell by 0.5% to $78.35. The ounce of fine gold consolidated by 0.4% to $2,389. The dollar index stabilized against a basket of currencies. According to the CME Group’s FedWatch tool, the probability of a monetary status quo on July 31 at the end of the next FOMC meeting is around 97% compared to a 3% ‘probability’ of a quarter-point easing. The probability of a rate cut on September 18 is, on the other hand, more than 90%…
Vice President Kamala Harris, 59, immediately announced her candidacy for the presidential election next November, endorsed by Joe Biden himself. “I will do everything in my power to unite the Democratic Party – and unite our nation – to defeat Donald Trump and his extreme program of Project 2025,” she wrote on X, calling on her supporters to financially support her campaign… This abrupt transition from “Biden President” to “Harris for President” reshuffles the cards of the American presidential election.
Donald Trump, for his part, said it would be “easier” to beat Harris than Biden. The former Republican president, who was sworn in last week as the candidate for the November election, made these comments to CNN. Trump indicated on his social network Truth that Biden was “not fit to be a candidate” and “certainly not fit to govern.”
Economic news was fairly sparse on Wall Street, with only the Chicago Fed’s June national activity index coming in at 0.05 versus a FactSet consensus of 0.22. The index was 0.23 a month earlier.
On Tuesday, traders will watch existing home sales and the Richmond Fed manufacturing index. On Wednesday, they will watch the preliminary July PMIs (manufacturing, services and composite), as well as new home sales. On Thursday, weekly jobless claims, durable goods orders and preliminary second-quarter GDP will be in focus, along with the Kansas City Fed manufacturing index. Finally, on Friday, markets will watch the University of Michigan consumer sentiment index, as well as household income and spending and the Fed’s closely watched core PCE price index.
Elsewhere, China announced an unexpected cut in its short-term policy rate and benchmark lending rates to boost economic growth. The People’s Bank of China cut the seven-day repo rate to 1.7% from 1.8%. It also plans to improve the mechanism for money market intervention operations. It is the first rate cut since August 2023, Reuters reported. Beijing also announced a cut in its benchmark lending rates. The one-year prime lending rate was cut to 3.35% from 3.45%, while the five-year prime lending rate was reduced to 3.85%. The PBOC also cut rates on its standing lending facility for commercial banks.
In Wall Street corporate news, Verizon, Cadence Design Systems, Truist Financial, IQVIA, Nucor and Brown & Brown are reporting earnings.
Wall Street will have a busy schedule Tuesday night, with earnings announcements from Alphabet, Tesla, Texas Instruments and Visa. Coca-Cola also reports before the market opens tomorrow, along with Danaher, GE Aerospace, Philip Morris International, Comcast, UPS, Lockheed Martin, HCA Healthcare, Sherwin-Williams, Moody’s, Freeport-McMoran, Paccar, Spotify, General Motors, Kimberly-Clark…
On Wednesday, Thermo Fisher Scientific, IBM, ServiceNow, AT&T, NextEra Energy, Boston Scientific, KLA Corporation, Fiserv, Waste Management, Equinor, General Dynamics, CME Group, Otis, GE Vernova, Newmont, Ford Motor and Chipotle Mexican Grill will release their results. AbbVie, Union Pacific, Honeywell, RTX and Northrop Grumman will announce their results on Thursday. Centene, Charter Communications, 3M, Colgate-Palmolive and Bristol-Myers Squibb will finally publish their results on Friday…
Values
Nvidia (+4.7%!) is reportedly working on a version of its new flagship AI chips for the Chinese market that would be compatible with current U.S. export controls, four sources familiar with the matter told Reuters. The company unveiled its Blackwell series of chips in March, which are expected to go into mass production later this year. Nvidia is expected to work with Inspur, one of its main distribution partners in China, on the launch and distribution of the new chip, tentatively named the ‘B20’, two of the sources told Reuters. Shipments of the B20 chip could begin in the second quarter of 2025, one source added.
Reuters reports that China accounted for about 17% of Nvidia’s revenue in the fiscal year that ended January following U.S. sanctions, down from 26% two years earlier. Nvidia’s most advanced chip for the Chinese market, the H20, initially got off to a slow start when shipments began this year, but sales are now growing rapidly, two sources told Reuters. Nvidia is on track to sell more than a million of its H20 chips in China this year, worth more than $12 billion, Reuters cited an estimate from research group SemiAnalysis. Still, the United States is expected to keep up pressure on export controls related to advanced chips…
Verizon (+0.3%) The group has nevertheless revealed rather comfortable quarterly accounts. The only downside is that revenues were slightly lower than expected at $32.8 billion, against $33 billion consensus. The group still recovered more wireless subscribers than expected over the period, with its flexible subscription plans associated with streaming services including Netflix or Disney+. Quarterly revenues from wireless services increased by 3.5% to $19.8 billion. Total revenues increased by 0.6%. Consolidated quarterly net income was $4.7 billion, compared to $4.8 billion a year earlier. Consolidated adjusted EBITDA represented $12.3 billion compared to $12 billion a year earlier. Adjusted EPS reached $1.15, as expected, against $1.21 a year earlier.
Truist Financial (+3.2%), the American regional banking institution announced for its fiscal second quarter a net income attributable to common shareholders of $826 million or 62 cents per share. On an adjusted basis, the net profit came to $1.2 billion or 91 cents per share. Total revenues plunged from $6.5 billion to… -$1.63 billion, mainly due to losses on securities. Adjusted revenues, however, increased by 3% with the increase in net interest income to $3.58 billion.
“In the second quarter, we continued to see solid momentum in our core banking businesses, as evidenced by strong year-over-year growth in investment banking and trading revenues and continued expense discipline. Client deposits are stabilizing and asset quality metrics remain in line with our expectations. While loan demand remains subdued, we are encouraged by an improvement in our client engagement and our increased ability to meet their needs,” management added.
IQVIA (+9.2%), the American leader in clinical research and health data, announced for its second quarter revenues totaling $3.814 billion, GAAP net income of $363 million and adjusted EBITDA of $887 million. Adjusted diluted earnings per share were $2.64 for the period. The consensus was for $2.56 in adjusted EPS for $3.79 billion in revenues. Quarterly R&D Solutions orders reached $2.7 billion, representing a book-to-bill ratio of 1.27. The R&D Solutions backlog reached $30.6 billion, up 8%. For the year 2024, the group now envisages a turnover of between 15.425 and 15.525 billion dollars, an adjusted EBITDA of between 3.705 and 3.765 billion dollars, and an adjusted diluted earnings per share of between 11.10 and 11.30 dollars.
Boeing (-0.4%) raised its 20-year aircraft delivery forecast to 43,975 units, 3% better than previously. The aircraft manufacturer also indicated that it noted a significant improvement in the production of its 737 MAX, and expects production of these aircraft to return to normal by the end of the year. In addition, the US Air Force has sealed an agreement with the aeronautical giant for the supply of E-7 Wedgetail aircraft. Finally, Korean Air will order around twenty 777X aircraft.
CrowdStrike (-13.4%) is falling further on Wall Street, as the cybersecurity group suffers analyst downgrades following the fallout from last weekend’s global IT outage, triggered by a faulty update to the group’s security software. JP Morgan notes that the overall disruptive nature of the event is likely to impact the software giant’s operational and financial performance.
