(Boursier.com) — After its rally on Thursday, marked by a jump of +1.26% in the Dow Jones and a gain of 1.15% on the Nasdaq, the American market succumbed to profit taking. At market close, the Dow Jones yielded -0.32% to 34,299 pts. With the decline of Microsoft (-1.66% to $342.33) after its historic high on Thursday, the S&P 500 fell by -0.37% to 4,409 pts. The stock market heaviness of the operating systems and software giant also weighs on the Nasdaq Composite, which drops by -0.68% to 13,689 pts.
In US economic news this Friday, the University of Michigan’s preliminary US consumer sentiment index for the month of June 2023 came in at 63.9 (60 market consensus and 59.2 a month earlier).
Christopher Waller, Governor of the Fed, estimated that inflation, adjusted for volatile elements such as food and energy, does not move, which could justify the need for additional monetary tightening. Core inflation is not moving as it should, despite the Fed’s accelerated monetary tightening, which worries Christopher Waller and refreshes market optimism.
Remember that the Fed chose, Wednesday evening, to maintain its rates between 5 and 5.25%, taking a break in order to take the time to observe the impact of previous measures. US central bank officials are eyeing two more rate hikes by the end of the year, but Wall Street seems far more optimistic and is already pricing in a pivot, despite repeated comments from Jerome Powell and his peers ruling out for the this hypothesis.
Richmond Fed President Thomas Barkin gave a somewhat comparable speech on Friday. He is therefore not opposed to further rate hikes if the data to come do not show that the drop in demand translates into a slowdown in inflation. “I’m still trying to be convinced of the plausibility of the hypothesis that the slowdown in demand will bring inflation relatively quickly back towards the 2% target,” Barkin said, quoted by Reuters, in a speech for the purpose of publication. speaking at an event organized by the NGO Maryland Government Finance Officer Association.
Traders refuse to accept the idea of further monetary tightening from the Fed and are banking on the imminent end of the tightening cycle, after the status quo decided this week on the federal funds rate, left unchanged between 5 and 5.25 %. According to the CME Group’s real-time FedWatch tool, the Fed could raise rates another quarter point on July 26, to between 5.25 and 5.5%, but the terminal rate will most likely be reached then. The same FedWatch tool shows a significant probability of a first monetary easing in December. However, Jerome Powell, head of the Fed, ruled out such a scenario on Wednesday evening during his press conference. The ‘dot plot’, which presents in the form of a dot chart the forecasts of the members of the Fed, shows the anticipation of two additional rate hikes of a quarter of a point (or one of a half -point) by the end of the year.
Friday also marked a day of the Four Witches on Wall Street, increasing market volatility with the simultaneous expiry of different types of contracts. This stock market event, which occurs 4 times a year – the third Friday of June, March, September and December, corresponds to the simultaneous expiry of 4 types of contracts: index and equity options, as well as futures on indices and stocks.
The barrel of WTI crude climbed 1.79% to $71.82.
The ounce of gold is at $1,957. The dollar index strengthened by 0.28% against the euro, to 0.9143.
Values
* iRobot (21.2% at $51). The UK competition regulator has cleared the acquisition of robot vacuum maker Roomba by Amazon for $1.7 billion. The UK CMA therefore considered that the agreement would not cause competition concerns in the UK. In April, the British authority had initiated an investigation into the agreement which had been announced in August 2022. Amazon and iRobot are continuing their work in cooperation with other regulators, but the operation seems to be on the right track.
* Virgin Galactic (+16.5% to $4.73). The space tourism group has announced that it is ready for a commercial flight of its rocket, expected at the end of the month. The firm founded by Richard Branson has indicated that its commercial spaceflight service will therefore be launched this month. Concretely, the first space flight, Galactic 01, is scheduled between June 27 and 30. Galactic Flight 02 would follow, if all goes well, in early August. Monthly commercial spaceflights are then expected. After multiple delays in the launch of this commercial service, it would therefore seem that the group is reaching the goal. The first commercial mission expected at the end of the month would carry three crew members from the Italian Air Force and Italy’s National Research Council.
* Intel (+1.52% to $36.37). The American microprocessor giant, eclipsed in recent months by its rivals Nvidia And AMD, intends to invest up to $4.6 billion in a new semiconductor assembly and test facility in Poland, part of a multi-billion dollar investment drive across Europe to strengthen its capacities. Intel had already announced plans last year to build a large chip complex in Germany as well as facilities in Ireland and France. The group thus intends to benefit from the rules of financing and the flexible subsidies of the European Commission. The Polish factory will employ 2,000 people and create several thousand additional jobs during the construction phase… Handelsblatt reported yesterday that Intel was close to an agreement with the German government for 9.9 billion euros. euros in subsidies, against 6.8 billion previously agreed.
* Adobe (+0.87% to $495.18). The American group, known for its Acrobat, Photoshop, Flash and InDesign products, published better-than-expected quarterly accounts on Thursday evening. The general manager of the case, Shantanu Narayen, also took the opportunity to discuss the “new era of generative AI”. For the second fiscal quarter, Adobe achieved adjusted earnings per share of $3.91, compared to a consensus of $3.78 and a level of $3.35 a year earlier. Revenues were $4.82 billion in the quarter ended early June, also beating market expectations, when they were $4.39 billion for the corresponding period last year.
Adobe therefore exceeded Wall Street’s estimates for the quarter. The group also intends to take advantage of the current trend with generative artificial intelligence integrations. The Californian group from San Jose has thus introduced AI functionalities in Acrobat, Photoshop or Premiere Pro. The group also offers Firefly, an artificial intelligence tool that generates images, to its major customers. “Users have now generated more than half a billion assets on Firefly’s website and in Photoshop, making these two betas the most successful in company history,” the company said. Reuters agency Adobe’s chief financial officer, Dan Durn. In terms of outlook, Adobe anticipates for the quarter started revenues housed between 4.83 and 4.87 billion dollars. Annual revenues are now expected to be between 19.25 and 19.35 billion, which again comes out above expectations. Adobe is also awaiting the completion of the acquisition for 20 billion dollars of the design platform with collaborative interface based on the cloud Figma.
* How are you (-12.86% to $38.15). The title had doubled in value on Thursday on Wall Street for its IPO, while the markets have regained their full confidence in recent weeks. Shares of the Mediterranean-style restaurant chain Cava Group soared 99% on Thursday for their stock market debut, the day after the deal was already priced well above expectations. The strong demand shows that investors are once again interested in companies that are growing quickly but not yet making a profit, the Wall Street Journal finds. Cava Group announced on Wednesday the price of its initial public offering of 14,444,444 common shares, at $22 per share.
* waltz disney (-1.74% to $91.32). The entertainment giant has announced the departure of its chief financial officer Christine McCarthy. She has been a key Disney executive for more than two decades. The firm said McCarthy was taking family medical leave. Her husband is sick, and has been in a health facility since the beginning of the year. A person familiar with the situation, quoted by the Wall Street Journal, however said that there had been no changes in his life recently that would require him to take a step back. McCarthy reportedly clashed with Disney Chief Executive Robert Iger and other senior executives over strategy, including how much Disney spends on content and recent restructuring that she says hasn’t gone far enough to streamline the business. The WSJ quotes a person familiar with the matter on this subject. Kevin Lansberry, currently executive vice president and chief financial officer of Disney Parks, Experiences and Products, will begin as interim chief financial officer effective July 1.
* Micron (-1.69% to $67.66). The American designer of ‘chips’ blacklisted by Beijing intends to continue its local commitment and wants to invest 600 million dollars in a Chinese factory despite the partial ban on its products. It is therefore an investment of 4.3 billion yuan for the American, over the next few years, in the Xian chip packaging plant. The investment includes the acquisition of packaging equipment that Micron has been using since 2016 from a subsidiary of Taiwanese Powertech Technology. Micron also intends to open a new production line at the site to manufacture mobile DRAM, NAND and SSD products to bolster the factory’s packaging and testing capabilities, Reuters reports.
The American would also be on the point of investing more than 1 billion dollars to set up a chip packaging factory in India, according to Bloomberg, which cites people with direct knowledge of the matter. Such a decision would diversify the group’s geographical footprint in a context of Sino-American tensions. An announcement could be made as soon as Prime Minister Narendra Modi visits the United States next week. The amount committed could even reach 2 billion dollars.
* Goldman Sachs (-0.42% to $338.1). Goldman Sachs’ board is beginning to re-evaluate Chief Executive David Solomon’s position, The New York Post reports. A Goldman insider told the NY Post that amid a string of senior executive departures, Solomon may have a problem with the board. Separate sources say Solomon does not understand the culture of partnership, teamwork and loyalty, and lacks the approachable manners of his predecessor Lloyd Blankfein. The article notes that there are no clear successors to Solomon given that many potential options have been dropped in recent years. Nonetheless, several insiders told the NY Post that Dan Dees, co-head of global banking and markets, may be the top internal candidate.
The Fed and the American financial market policeman, the Securities & Exchange Commission (SEC), are investigating the role played by the New York investment bank Goldman Sachs under two deals with Silicon Valley Bank that preceded its collapse. This is reported by the Wall Street Journal, citing sources familiar with the matter. Reuters recalls for its part that the Silicon Valley Bank had recorded a loss of 1.8 billion dollars on the sale of a bond portfolio to Goldman Sachs, which had also been involved in a failed sale of shares of SVB which led to the flight of the depositors then to its collapse.