(Boursier.com) – New session of tensions on Wall Street Friday, the day after the shock wave Apple which had led, Thursday, to a general decline in the markets across the Atlantic. The pressure continued on Friday on Wall Street since, at the close, the S&P 500 fell -1.51% to 3,585 pts. The Nasdaq is exactly in the same movement of -1.51% to 10,575 pts. The Dow Jones fell -1.71% to 29,725 pts.
Eco and Currency
Inflation fueled financial market concerns on Friday as U.S. household consumer spending surges… Personal household income for the month of August 2022 rose 0.3% from the prior month , in line with market consensus, after a comparable rise in July. Household personal expenditure rose by 0.4% (0.2% consensus), whereas it was down 0.2% a month earlier. The core PCE price index monitored by the Fed rose more than expected, up 4.9% year on year (4.7% consensus) and 0.6% compared to the previous month.
The Chicago PMI manufacturing index for September 2022 stood at 45.7, against a consensus of 52 and a level of 52.2 a month earlier.
The final index of US consumer sentiment measured by the University of Michigan for the month of September 2022 came in at 58.6, down from 59.5 from the FactSet consensus and 59.5 also for its preliminary reading.
In her opening remarks at a conference on financial stability considerations in monetary policy, Lael Brainard, Vice Chair of the Fed, pointed out that many central banks around the world have pivoted their monetary policies sharply to curb inflation, with adjustment occurring quickly in some sectors and more slowly in others. Lael Brainard also warned of the risk of premature monetary easing, with inflation remaining high. Consistent with Jerome Powell’s recent speech, Lael Brainard said the Fed should keep rates rising for a while to calm inflation. “Monetary policy is focused on restoring price stability in an environment of high inflation,” Brainard said, noting that it will take time for the full effect of the tightening of financial conditions caused by the rate hikes to materialize. felt in the economy and prices. “Inflation is very high in the United States and abroad, and the risk of additional inflationary shocks cannot be ruled out,” she said.
According to the CME Group’s FedWatch tool, the probability of a 4th consecutive rate hike of 75 basis points on November 2 after the next Fed meeting is 61.2%, against 38, 8% for the probability of a 50 bp hardening. The current range of fed funds rates is between 3 and 3.25%.
The barrel of WTI crude plunged 2.12% to $79.77. The dollar index stabilized at 1.02. The ounce of gold is stable at $1,662.
Values
Nike (-12.81% to $83.12). The sports equipment manufacturer published quarterly profits slightly above expectations on Thursday evening, but it reported a sharp increase in inventories and low margins. The group said price reduction efforts to eliminate off-season clothing from warehouses in North America would reduce gross margins for the remainder of the fiscal year. The group also warned of a large potential impact from the stronger dollar. Management also said it expects rivals to continue cutting prices at least through the end of the calendar year as they try to eliminate their own inventory.
For the first fiscal quarter ended late August, Nike reported net profit of $1.5 billion and 93 cents per share ($1.9 billion and $1.16 per share a year earlier). Sales totaled $12.7 billion ($12.2 billion a year earlier). The FactSet consensus was 92 cents in earnings per share and $12.28 billion in billings. Gross margin fell to 44.3%. Nike executives said the decline “was primarily due to North America, which took steps to liquidate excess inventory through markdowns and wholesale market actions. Nike’s inventory s was $9.7 billion, a 44% increase over the prior year comparable period, due to what executives described as “continued supply chain volatility, partially offsetting by strong consumer demand in the quarter.”
The lopsided inventory levels followed factory closures last year in Asia, where most of its shoes are made, leading to late product deliveries. In addition, with the dollar continuing to strengthen, Nike management expects the negative full-year foreign exchange impact on sales and reported earnings before interest and tax to be $4 billion, respectively. $ and $900 million.
Boeing (-3.39% to $121.08). The US Federal Aviation Administration (FAA) told the group that it had not finalized the necessary steps for the certification of the 737 MAX 7 for December, according to a letter consulted by the Reuters agency.
Apple (-3% to $138.2). Apple is getting crunched on Wall Street again. Apple’s Vice President of Procurement Tony Blevins has left the company following a TikTok video showing him making inappropriate remarks. This TikTok video showed him joking about women at a car show. An Apple representative confirmed the departure to CNBC. Tony Blevins’ main role was to negotiate with suppliers to keep the prices paid by the company for computer parts as low as possible.
Meta Platforms (-0.54% to $135.68). Facebook’s parent company announced a hiring freeze and further restructuring amid heightened economic uncertainty. Mark Zuckerberg’s group would have communicated in this sense to its employees, Bloomberg understands. “I had hoped the economy would have stabilized more clearly now, but from what we’re seeing, that’s not the case yet, so we want to plan somewhat conservatively,” Zuckerberg told employees. during a weekly question-and-answer session. The social media company had cut plans to hire engineers by at least 30% this year, Reuters previously reported in June. Zuckerberg also said yesterday that Meta will cut budgets for most teams and that individual teams will have to figure out how to handle roster changes.
Dupont de Nemours (-0.49% to $50.4). The group has received the necessary authorizations to buy Rogers for $5.2 billion, with the exception of the Chinese agreement.
Micron (+0.18% to $50.1). The memory chip designer ends up slightly the day after the publication of its quarterly. The group missed the sales consensus for the past quarter and delivered very weak forecasts. In its 4th fiscal quarter ended in August, Micron posted adjusted earnings per share of $1.45, compared to a consensus of $1.4 and a level of $2.42 a year earlier. Revenues stood at $6.64 billion, missing the consensus by 4%, when they were $8.27 billion a year earlier. The group warns that difficult times are ahead, with the drop in demand for PCs and smartphones. Micron has thus significantly reduced its capex forecasts (capital expenditure) and is counting on a capex of around $8 billion for the year under way, down by more than 30%. For the second half of the 2023 financial year, management still anticipates a return to strong growth with the expected recovery in demand. For the 1st fiscal quarter of 2023, however, the guidance is very cautious with expected revenues of $4.25 billion, more or less $250 million, compared to a consensus of $5.6 billion. Quarterly earnings per share are expected at 4 cents, plus or minus 10 cents, against… 64 cents consensus.