(Boursier.com) – Wall Street ends the week in scattered order, this Friday. After a more than 2% plunge in the Nasdaq last night, with Netflix and Tesla retreating, the mood improved despite the Nasdaq Composite falling again.
At market close, the S&P 500 took +0.03% to 4,536 points. The Dow Jones is in equilibrium, rising by +0.01% to 35,227 pts, preserving the thickness of the line for a 10th consecutive session of increase! The Nasdaq fell -0.22% to 14,032 pts. This quasi-stability in the index testifies to the wait-and-see attitude of the market before the next burst of publications and the Fed meeting next week.
The phenomenon of “buy the dip” has been repeated regularly in recent months on the stock exchange in the United States, but valuations remain quite tight and demanding for American megacaps. The Tesla and Netflix files have shown that even profits above expectations could no longer suffice on copiously valued files.
In the meantime, the thesis of a soft economic landing defended by a good number of strategists is taking a little lead in the wing this week, since apart from employment statistics, the majority of US economic indicators (consumption, production, etc.) are showing a clear slowdown or contraction…
Next week the publications will continue with Microsoft and Alphabet, which announce Tuesday evening, while Meta will publish, Wednesday…
Apart from the financial results of the big American “tech” names, the other major meeting next week will obviously be that of the central banks. The Fed will hold its monetary policy meeting on July 25 and 26. The FedWatch tool now gives a probability close to 100% of a further quarter-point rate hike. It would bring the fed funds rate to between 5.25 and 5.5%. It could nevertheless mark the last increase in the Fed’s monetary tightening cycle. Easing would then be possible in the first half of 2024, depending on economic and financial developments.
Still in erratic fluctuations, the oil market resumed its upward path. WTI appreciated by +1.77% to $76.96. The barrel of Brent North Sea gained +1.43% to $80.76.
On the currency side, the dollar is fairly stable (+0.07%), trading at 0.8986 against the euro.
The ounce of gold fell -0.79% to $1,962 (1,763 euros). Bitcoin is still below $30,000, ending at $29,865.
Values
* interpublic (-13.32% to $32.87%). The American communication group published, yesterday evening, disappointing profits and revenues for the 2nd quarter, with an organic decrease of 1.7%. Quarterly revenue totaled $2.67 billion, or $2.33 billion on an adjusted basis ($2.39 billion consensus). Consolidated net earnings were $265.5 million. Adjusted EBITDA before restructuring charges was $330.2 million. Adjusted EBITDA margin before restructuring charges was 14.2% on revenue before billable expenses. Diluted earnings per share were $0.68 as reported and $0.74 on an adjusted basis. Diluted EPS as reported and adjusted includes a tax benefit of $0.17 per share related to the conclusion of the prior period’s routine federal tax audits. Thus, adjusted EPS excluding this element represented 57 cents, against 60 cents consensus.
“Given our first six months, we are revising our full-year organic growth expectation to between 1% and 2%, while remaining fully committed to our existing margin target for the year of 16.7%, which represents margin expansion over 2022. Our new business performance so far this year has been exceptionally strong, with wins in many of the industry’s largest and most competitive reviews,” comments Philippe Krakowsky, CEO of IPG.
* AutoNation (-12.33% to $155.11). The American car retailer, supplier of new and used vehicles as well as associated services, has just published better than expected quarterly accounts. The Fort Lauderdale, Florida group posted net income of $273 million, or $6.02 per share, for the quarter ($376 million, or $6.48 per share, a year earlier). On an adjusted basis, the group generated EPS of $6.29 ($5.91 FactSet consensus). Revenues reached $6.9 billion, while the consensus was $6.8 billion. The company benefited from demand for new vehicles and aftermarket services, which offset the impact of lower used vehicle sales.
* Comerica (-4.12% to $50.75). The American bank announced for its 2nd quarter a profit higher than the Wall Street consensus, the rise in rates having boosted the net interest income (NII) of the establishment to 621 M$ (561 M$ a year earlier). Quarterly earnings per share were $2.01, versus $1.86 consensus. However, the NII is now only expected at +1 to +2% over the year (+6 to +7% previously). Average deposits at the end of the quarter were $64.3 billion, down 5% sequentially.
* American Express (-3.89% to $171.22). The payment card specialist beat the second-quarter earnings consensus, as its affluent customers continued to spend despite inflation and rising interest rates. AmEx therefore benefited from record customer spending. Total network volumes increased 8% to $426.6 billion in the second quarter ended June 30, with double-digit growth in spending by US consumers and international cardholders. The credit card company posted earnings of $2.89 per share for the quarter, against a consensus of around $2.8. AmEx’s total provisions for credit losses amounted to $1.2 billion in the second quarter ($410 million a year earlier). Total revenue, net of interest expense, rose 12% to $15.05 billion, driven by higher lending volumes and increased cardholder spending. However, they are very slightly below expectations. Consolidated quarterly net profit was $2.17 billion, up 11%.
“We achieved our 5th consecutive quarter of record revenue and achieved record earnings per share this quarter, each growing 12% year over year, demonstrating the continued strength of our differentiated business model,” said Stephen J. Squeri, Chairman and Chief Executive Officer. Based on results to date, AmEx reaffirms its full-year 2023 guidance provided in January of 15-17% revenue growth and $11-11.40 EPS…
* CSX (-3.71% to $32.45). The US railroad giant missed the revenue consensus for the quarter ended on Wall Street, as intermodal volumes declined. Revenue fell 3% to $3.7 billion, versus $3.74 billion of market consensus. Net profit was $996 million or 49 cents per share ($1.18 billion and 54 cents per share a year earlier). Earnings per share came out in line with the consensus.
* Intuitive Surgical (-3.16% to $336.66). Lunel’s group once again beat market estimates in terms of quarterly revenue and profit. The American giant of medical robotics nevertheless gives in to profit taking on the stock market. The Californian group Sunnyvale posted revenues of $1.76 billion over the period ended, up 15% ($1.74 billion consensus). The growth in the volume of procedures was 22% with the da Vinci surgical robot, compared to last year. Quarterly adjusted earnings per share were $1.42, versus $1.32 consensus.
* Regions Financial (-3.10% to $19.72). The bank of Alabama unveiled for the 2nd quarter of the results ‘on line’. Earnings per share were 59 cents, in line with consensus. Average deposits, however, declined 3% sequentially and 10% year-on-year. The bank has provisioned $118 million for credit losses in the quarter to the end of June.
* Schlumberger (-2.25% to $49.93). The oil services giant has published its accounts for the second fiscal quarter. Revenue of $8.10 billion increased 5% sequentially and 20% year-on-year, when consensus was $8.2 billion. GAAP EPS was $0.72. It was up 11% sequentially and 7% year-on-year. Adjusted EPS also came out at $0.72, versus $0.71 consensus. It was up 14% sequentially and 44% year-on-year. Net income attributable to SLB was $1.03 billion and increased 11% sequentially and 8% year-on-year. Adjusted EBITDA was $1.96 billion. It increased 10% sequentially and 28% year-on-year.
* Huntington Bancshares (-0.67% to $11.78). The bank beat the Wall Street consensus in terms of profits with net interest income and trade credit demand. The NII (net interest income) increased by 7% to $1.35 billion. The NII is now expected to rise 3-5% over 2023 (6-9% previously). Earnings per share were 35 cents, versus consensus 34 cents. Finally, deposits totaled $148 billion, up 2%.
* Capital One Financial (+0.50% to $115.57). The Bank of Virginia, also a credit card issuer, on which Warren Buffett’s Berkshire Hathaway recently initiated a position, published its financial results for the second quarter last night. For this period, Capital One posted adjusted earnings per share of $3.52, clearly exceeding the market consensus – close to $3.2. Quarterly revenues exceeded $9 billion, but came out slightly below market expectations (consensus $9.1 billion). They compare to revenues of $8.2 billion made over the corresponding period last year. The firm benefited over the period from the rise in interest rates and its impact on loan income. As for deposits, the bank held up very well and reported growth of 12% over the period to nearly $344 billion.
* Digital World Acquisition Corp. (+50.30% to $20.08). Huge rebound on Wall Street for the file! The Special Purpose Acquisition Company (SPAC), which is to merge with former US President Donald Trump’s media company, has settled regulatory charges that it made “misrepresentations” to investors, which is boosting the former “meme stock”. The Securities and Exchange Commission, the watchdog of the U.S. stock market, said Thursday that Digital World Acquisition Corporation, which violated anti-fraud provisions of federal securities laws, had agreed to an order and payment of $18 million if it closed the merger. The operators therefore hope that the merger, announced in October 2021, can continue after payment of the fine.