Wall Street: bright red, oil and gold are soaring

(Boursier.com) — Wall Street is in sharp decline for this last session of the week. The mixed publications of several major American banks are not enough to reassure at a time when tensions between Iran and Israel in the Middle East are at their peak. The S&P 500 is currently falling by 1.07% to 5,144 pts, while the Dow Jones is dropping 0.96% to 38,090 pts. The Nasdaq lost 1.34% to 16,221 pts.

JP Morgan, Citi, BlackRock and Wells Fargo have therefore officially launched the quarterly season on Wall Street. Investors are now hoping that the results will allow the indices to continue their rise as hopes of a Fed rate cut have faded like snow in the sun. Overall, the market expects S&P 500 members’ EPS to grow 3.8% in the first quarter, according to data compiled by Bloomberg Intelligence.

After the latest data on inflation in the United States, the markets are now counting on fewer than two rate reductions from the Fed in 2024 compared to 6 or 7 at the start of the year. The CME Group’s ‘Fedwatch’ tool now assigns a probability of 70% to a new Fed status quo in June compared to 37.1% last week. On the bond market, it is time for relaxation. The 10-year rate fell by 8.5 basis points to 4.503%, retracing part of the 22 bp increase recorded during the two previous sessions.

On the oil market, a barrel of WTI crude climbed almost 3% to $87.4 on the Nymex as Israel prepares for a possible strike by Iran in the coming hours. “A direct confrontation between Israel and Iran would mean a significant escalation of the conflict in the Middle East and lead to a significant rise in oil prices,” say Commerzbank analysts.


The dollar index gained 0.7% against a basket of currencies and the euro lost another 0.9% against the greenback at $1.063 between banks. Expectations are growing that the European Central Bank will begin cutting interest rates in June, well before the Federal Reserve begins monetary easing due to stubborn inflation in the United States. Bitcoin advances 1% to $70,850. Finally, gold jumped more than 2% to 2,422 dollars per ounce, to its all-time high.


* Apple (+0.6%) is counting on AI to boost its Mac sales. According to information obtained by ‘Bloomberg’, the Cupertino company is about to equip its computers with a new family of internal processors equipped with artificial intelligence processing capabilities. The company, which launched its first Macs equipped with M3 chips five months ago, is already on the verge of producing the next generation – the M4 processor – according to agency sources. The new chip would be available in at least three main versions, and should equip every Mac model.

After peaking in 2022, Mac sales fell 27% during Apple’s most recent fiscal year. With these new chips, Apple intends to give a boost to its computer sales, the models of which equipped with the M4 chip should begin to be marketed at the end of the year. The Apple firm’s new chips are part of a broader initiative to integrate AI capabilities into all of its products. New iMacs, a low-end 14-inch MacBook Pro, high-end 14-inch and 16-inch MacBook Pros, and Mac mini are all expected to feature M4 chips. The company would like to highlight the AI ​​processing capabilities of the new chips and how they will integrate with the next version of macOS in June at Apple’s annual developer conference. According to the latest rumors, the group could take the opportunity to announce a new partnership in AI and unveil important changes to iOS.

* State Street (+0.5%) reported a 16% decline in quarterly profit to $463 million, or $1.37 per share, due to a 6% increase in expenses, including 130 M$ to replenish the insurance fund of the Federal Deposit Insurance Corporation. Consistent with general industry trends, net interest income (NII) decreased 6.5% to $716 million. At the end of the March quarter, the bank had a record $4.3 trillion in assets under management (AUM).

* JP Morgan Chase loses 5.6%, while the bank has just revealed its quarterly results. The leading American bank posted net profit of $13.4 billion for the first three months of 2024, or EPS of 44 cents, for adjusted revenues of $42.55 billion, up 8.2%. and against a consensus of $41.64 billion. Provisions for loan losses reached $1.9 billion. Full-year net interest income, excluding trading, is expected to be $89 billion, higher than the previous estimate of $88 billion, but lower than the $90.68 billion expected by analysts.

“Many economic indicators remain favorable,” said Jamie Dimon, CEO of JP Morgan. “However, looking forward, we remain alert to a number of important uncertain forces.” The leader cited wars and geopolitical tensions, “persistent inflationary pressures” that “may likely continue” and the Federal Reserve’s quantitative tightening campaign. “We don’t know how these factors will evolve, but we need to prepare the group for a wide range of potential environments to ensure we can always be there for customers.”

* Morgan Stanley yields 2% after losing more than 5% yesterday. A fall linked to a report from the ‘Wall Street Journal’ according to which federal regulators are investigating how the bank controls clients who could launder money through its wealth management division. The U.S. Securities and Exchange Commission, the Office of the Comptroller of the Currency (OCC) and other Treasury Department offices are involved, according to the WSJ. The question is whether the bank has “sufficiently investigated the identity of potential customers and the origin of their wealth, as well as how it monitors the financial activity of its customers,” the newspaper said.

The US government has stepped up pressure on the industry to tighten controls against money laundering. The bank told regulators it was improving controls and procedures and met with Federal Reserve officials to ease concerns last year.

* Citigroup (-1.2%), the New York financial institution has just revealed the accounts for its first fiscal quarter. Results down with rising costs, but better than expected. The firm recorded a net profit of $3.37 billion for the quarter ended at the end of March, down 27% year-on-year, or an EPS of $1.58. Revenues fell 2% to $21.1 billion. The market consensus was $1.23 EPS for $20.4 billion in revenue. FICC revenues (fixed income, raw materials and currencies) came to $4.15 billion, compared to $4.12 billion expected, while equities revenues (shares) reached $1.23 billion versus $1.11 billion expected. consensus.

Chief executive Jane Fraser began a major reorganization in September to simplify the bank and improve its performance. The costs of the reorganization pushed spending to $14.2 billion. Citigroup’s business overhaul has resulted in “a cleaner, simpler management structure that fully aligns with and facilitates our strategy,” the executive said. “We have made good progress by exiting several existing platforms, streamlining end-to-end processes and strengthening our risk and control environment.”

* Intel (-3.3%) and AMD (-4%) are under pressure. China is stepping up efforts to reduce its dependence on foreign technology and plans to eliminate American chipmakers from its telecommunications infrastructure by 2027, according to the ‘Wall Street Journal’. The country’s Ministry of Industry and Information Technology (MIIT) earlier this year ordered major operators to phase out foreign processors that are crucial to their networks within the stipulated deadline.

* BlackRock (-2%) revealed the results for its first quarter 2024. Over the period, the New York asset management giant recorded adjusted net profit up 23% compared to the previous year at 1, $5 billion, or $9.81 per share, beating analysts’ average estimate of $9.34. Net profit stood at $1.57 billion, or $10.48 per share, compared to $1.16 billion or $7.64 per share a year earlier.

Revenue jumped 11% to $4.72 billion thanks to higher performance fees and technology revenue, as well as the impact of rising markets on average assets under management. Assets under management reached a record level of $10.5 trillion, driven by consistent organic growth and positive market movements. Investment advisory and administrative fees, which are a percentage of assets under management and are BlackRock’s main source of revenue, climbed nearly 8.8% to $3.63 billion.

* Wells Fargo fell by 0.6% after the publication of its quarterly results. The Californian banking group generated a net profit of $4.62 billion for the first three months of the year, or $1.20 per share, compared to $4.99 billion or $1.23 per share a year ago. earlier. Adjusted EPS came to $1.26 versus $1.11 consensus. Net interest income, the difference between what the bank pays for deposits and what it earns for loans, fell 8% to $12.23 billion, compared to a consensus of $12.3 billion. .

Nonetheless, overall revenue ($20.86 billion) beat estimates, helped by an increase in investment advisory fees and brokerage commissions. “The investments we are making across the franchise contributed to an increase in revenue compared to the fourth quarter, as an increase in non-interest income more than offset an expected decline in net interest income,” said CEO Charlie Scharf. Wells Fargo warned last January that its net interest income could decline 7% to 9% this year. The group is still subject to an asset cap that prevents it from growing as long as authorities judge that the problems linked to the fake accounts scandal have not been resolved.

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