Wall Street is now losing a little ground this Thursday, with the S&P 500 dropping 0.36% to 4,766 pts and the Dow Jones consolidating 0.35% to 37,563 pts, compared to a drop of 0.34% on the Nasdaq to 14,918 pts. . Yesterday, the American rating ended up quite significantly with the Nasdaq, driven once again by the star of the moment Nvidia, but also by Microsoft and Amazon. Operators are showing a little more caution today, after having learned of mixed figures for American inflation, and while awaiting a good range of quarterly bank publications.
The US inflation figures for December are somewhat disappointing. Thus, today’s report highlights a consumer price index increasing by 0.3% compared to the previous month, against 0.2% market consensus. Over one year, this indicator increased by 3.4% compared to 3.2% consensus. Excluding food and energy, the December CPI increased by 0.3% compared to the previous month, in line with market expectations, and by 3.9% over one year. A month earlier, the CPI had increased by 0.1% compared to the previous month and by 3.1% year-on-year (+0.3% and +4% excluding food and energy).
Unemployment claims fell slightly last week in the United States. The US Department of Labor announced for the week ending January 6, unemployment claims numbering 202,000, down 1,000 compared to the previous week. The consensus was positioned at 210,000. The four-week average stands at 207,750, down 250. Finally, the number of unemployed workers receiving compensation for the week ended December 30 stands at 1.834 million, down 34,000 over seven days (1.871 million consensus).
Black gold is showing a fairly clear progression, supported by the high tensions in the Middle East. A tense situation, reinforced by Tehran’s seizure of an oil tanker off the coast of Oman. The boat, previously seized by the United States for transporting Iranian oil, was captured by Tehran off the coast of Oman, escalating tensions on the world’s most important trade route for global crude supplies.
On the Nymex, a barrel of WTI crude rose 3% to $73.5. An ounce of gold gains 0.4% to $2,037. The dollar index gained 0.3% against a basket of currencies. The yield on the 2-year T-Bond is 4.33%, compared to 4.02% on the 10-year and 4.22% on the 30-year.
According to the CME Group’s FedWatch tool, it is extremely likely (97%) that the Fed will leave its rates unchanged on January 31 after its next monetary meeting, between 5.25 and 5.5%. The first relaxation could take place on March 20 during the next meeting (probability of around 69% according to the same tool). The latest economic statistics have shown, across the Atlantic, a fairly resilient job market but some additional signals of economic slowdown… The disappointing inflation figures today have not, for the moment, significantly changed the expectations of rate cuts…
The US budget deficit for December will be revealed at 8 p.m. (consensus -$52.4 billion). Thomas Barkin, the head of the Richmond Fed, will speak in the evening.
On Friday, markets will follow the producer price index and a speech from the Fed’s Neel Kashkari.
John Williams, head of the New York Fed, indicated last night that rates were expected to remain high for some time. He added that the central bank’s work to bring inflation back towards the 2% target was not yet complete, although the current level of rates would appear sufficiently restrictive. The Fed could begin to reduce its rates when it has confidence in this return of inflation to 2%, but there is still a way to go according to the official. Monetary policy therefore remains dependent on data. Finally, the leader was doubtful regarding a possible reduction in the pace of QT (quantitative monetary tightening, or reduction of the Fed’s balance sheet). He considers the liquidity sufficient on the markets, but also specifies that the Fed will have to think this year about the outcome of the quantitative tightening program.
Concerning companies listed on Wall Street, KB Home announced its latest quarterly results last night, which were rather reassuring. Infosys, an Indian giant listed on the American market, publishes this Thursday. Tomorrow Friday, banks and financial institutions will kick off the 4th quarter results season. UnitedHealth, JP Morgan Chase, Bank of America, Wells Fargo, BlackRock, Citigroup and Bank of New York Mellon will reveal their accounts before the market. Delta Air Lines will also release tomorrow.
Values
KB Home (-3%), the American real estate developer, published adjusted earnings per share of $1.85 for its fourth quarter, compared to a consensus of $1.69 and a level of $2.47 a year ago. year before. Revenues totaled $1.67 billion in the quarter ended in November, beating consensus by 4%, while they stood at $1.94 billion for the comparable period last year. Thus, the group shows a drop in revenues, while the average selling price fell to $487,300 compared to $510,400 a year before. Nevertheless, housing deliveries, numbering 3,407, exceed expectations, and the group anticipates a recovery in demand.
Net orders for the fourth quarter increased by…176% to 1,909, and net order value increased by 157% to $932.6 million! These increases reflect improved demand and a lower cancellation rate compared to the prior year quarter. Gross orders for the quarter increased 23% to 2,667, and the cancellation rate as a percentage of gross orders improved to 28%, from 68%.
Google (Alphabet +1%) is cutting hundreds of additional positions working in particular on its digital assistant, in hardware or engineering, indicates Bloomberg. The group is therefore continuing its cost reduction initiatives, with affected employees working in particular on Google Assistant or within the hardware team dedicated to augmented reality. Employees of the central engineering organization would also be hit. “Throughout the second half of 2023, some of our teams made changes to become more efficient and work better, and to align their resources with their highest product priorities,” Google said. “Some teams continue to make these types of organizational changes, which include some role reductions on a global scale,” adds a spokesperson for the group cited by Bloomberg. Recall that about a year ago, parent company Alphabet announced its intention to cut around 12,000 jobs, or more than 6% of its workforce.
Tesla (-3%), the Texan electric automobile giant, informed its American employees active in production that they were going to obtain salary increases, indicates Bloomberg. Handlers, production associates and quality inspectors would thus benefit from a salary increase “adapted to the market”, according to Bloomberg, which takes information from a prospectus displayed in Tesla’s facilities in Fremont.
Microsoft (+1%). Microsoft-backed ChatGPT creator OpenAI is reportedly in talks with CNN, Fox Corporation and Time to enter into licensing deals. This is what Bloomberg reports, citing people familiar with the situation. Thus, the artificial intelligence startup is continuing its efforts to secure access to content allowing it to train its AI tools, while accusations of copyright infringement are increasing.
Netflix (+3%), the American video streaming colossus, would have exceeded 23 million monthly active users on its advertising-financed subscriptions, indicates Variety, citing advertising director Amy Reinhard. The latter spoke at the ‘Variety Entertainment Summit’, as part of the CES 2024 show in Las Vegas. The article compares the numbers to an October letter to shareholders in which Netflix said its ad-supported offerings had more than 15 million monthly active users worldwide.
Hertz Global Holdings (-5%) will sell around 20,000 electric vehicles from its American fleet, or around a third of its overall EV fleet! The American car rental group intends… to reinvest part of the proceeds from the sale of EVs by purchasing gasoline vehicles in order to meet customer demand, according to a regulatory notice. The group has observed low demand for the rental of its electric vehicles. The sales would represent a depreciation of approximately $245 million in the fourth quarter of 2023. The measures should improve adjusted corporate Ebitda this year, but they will weigh on the fourth quarter of 2023…
Collision and damage costs for electric vehicles remained high in the fourth quarter, the group said. The depreciation charges announced for Q4 are in addition to those of depreciation that the group plans to record during the quarter as part of the normal management of its fleet. Hertz will continue to offer EVs but will implement measures to increase profitability, developing infrastructure such as charging stations and strengthening relationships with vehicle manufacturers.
Infosys (+4%), the Indian digital services and consulting giant, listed on Wall Street, announced third fiscal quarter profits lower than expectations. The group has also adjusted its annual revenue forecasts due to weak customer demand. Consolidated quarterly net profit fell 7 percent year-on-year to 61.1 billion rupees, about $735 million. The market consensus was at 61.7 billion rupees. The group is adjusting its annual revenue forecasts for the third time, but this time it is a tightening of the guidance. Infosys now sees annual growth of 1.5-2% at constant currencies, up from 1-2.5% previously. For the third quarter, revenue increased to Rs 388.2 billion.
Citigroup (-2%) indicated that its fourth quarter results would be affected by more than $3 billion in one-time items, reserves and charges, including $1.3 billion in provisions for foreign currency exposure. in Argentina and Russia. The bank will also record a charge of $1.7 billion to pay a special assessment to the Federal Deposit Insurance Corporation, the bank deposit guarantee body. In total, the combined charges and provisions will weigh on quarterly results by nearly $3.8 billion.
