(Boursier.com) — The US rating, which stalled last night following Jerome Powell’s latest comments about inflation and interest rates, is still struggling this Friday. The DJIA lost 1.32% to 34,334 pts and the S&P 500 1.16% to 4,342 pts, while the Nasdaq lost 0.66% to 13,087 pts. A barrel of WTI crude fell 1.6% to $102. The ounce of gold yields 0.4% to $1,941. The dollar index gained 0.5% against a basket of benchmark currencies.
The preliminary US composite PMI for April 2022 came in at 55.1, versus market consensus of 57.5. The manufacturing index came out at 59.7, higher than expected, but the services indicator fell to 54.7, well below the consensus which was 58.
Fed Chairman Jerome Powell, speaking Thursday night at an IMF-hosted meeting in Washington, spoke particularly strongly, saying it seemed “appropriate to move a little faster than expected” to raise key interest rates. He hammered that it was “absolutely essential to restore price stability”, and to bring inflation back towards the Fed’s medium-term objective of 2% per year.
He admitted for the first time in public that he was possible that the Fed will raise its key rates by half a point at its meeting on May 3 and 4. This 50 basis point interest rate hike will be “on the table”, he said, adding that he was in favor of the idea of raising rates quickly (“front-loading”) during a cycle. exit from accommodative monetary policy.
Mr Powell added that the Fed was not betting that inflation would have peaked in March, and that it would “move quickly” to bring policy rates back to neutral or even restrictive territory if it happens. is appropriate. The Fed chief also acknowledged that the central bank’s goal of steering a soft landing for the economy will be neither simple nor easy. “Our goal is to use our tools to re-synchronize supply and demand so that inflation comes down, and does so without resulting in a recession,” Powell commented. “Nobody at the Fed is going to tell you it’s going to be simple or easy. It’s going to be very complex. We’ll do our best to make it happen,” he added. “It is absolutely essential to restore price stability. Economies do not function without price stability.”
At its March meeting, the US central bank had raised the rate of “fed funds” by a quarter point, its first increase in three years, to bring it between 0.25% and 0.50%. Fed officials estimate the neutral level for the economy to be around 2.4%. But several members of the Fed think it will take more to tackle inflation, which reached 8.5% over one year in March in the United States. James Bullard, Fed boss of St-Louiss, even believes that the “fed funds” rate should be raised to 3.5% by the end of the year, and raised by three-quarters of a point in May…
At the same meeting devoted to the global economy, Christine Lagarde, the President of the ECB, affirmed that the institution will take key decisions at its June meeting on the end of its asset purchase program and on the evolution of key interest rates. She pointed out that the economies of the euro zone and the United States are developing at different speeds, and pointed out that almost half of the inflation in the euro zone is due to the rise in energy prices, which suffers a “supply shock”
Earlier in the day, several members of the ECB spoke out in favor of accelerating monetary firming to counter inflation. The Belgian Pierre Wunsch is thus considering a rate hike as early as July, while the German Joachim Nagel mentioned a halt in ECB purchases as of June, which would open the door to a rate hike.
Bond markets reacted strongly to these statements. In the United States, the markets are now anticipating no less than three consecutive half-point increases from the Fed, during the meetings in May, June and July. The yield on the 10-year T-Bond, which rose yesterday, remains at 2.89% today, and the US 2-year rate, which reacts more to monetary policy, has also risen to 2.73% the highest since November 2018.
On the geopolitical front, Russia, which claims control of Mariupol, also says it wants to take control of Donbass. The United States believe that the next four weeks will be decisive for the future of Ukraine, and have just announced $800 million in additional military aid.
Values
Snap Inc. (+5%), Snapchat’s parent company, disappointed somewhat in the first fiscal quarter, posting a widening of its loss. Nevertheless, user growth exceeded market expectations. The number of daily active users climbed 18% to 332 million, but the group suffered a net loss in “a difficult operating environment”. User forecasts are positive, but the group also warns that…supply chain disruptions, labor issues and inflation could affect ad spend.
The Californian group from Santa Monica posted revenues of 1.06 billion dollars in the quarter ended at the end of March, up 38% year-on-year, against 1.07 billion consensus. Quarterly net loss was $360 million, down from $287 million a year earlier. Adjusted EBITDA was positive at $64 million, compared to a $2 million deficit a year earlier. Free cash flow was $106 million, compared to $126 million for the comparable period last year.
American Express (-1%) published for its first fiscal quarter revenues up 29% to 11.7 billion dollars, for a net profit of 2.1 billion dollars and $2.73 per share compared to 2, $2 billion last year. Member spending supported activity, with the resumption of travel and entertainment activities. The consensus was at $2.44 quarterly earnings per share. Spending on travel and entertainment soared 121% on an adjusted basis from a year earlier, and returned in March, for the first time, to pre-pandemic levels. AmEx maintains its full-year revenue growth forecast of 18% to 20%, while earnings per share are expected between $9.25 and $9.65.
Newmont (-5%), the Denver mining giant, announced for its first quarter a net profit attributable to shareholders down to 432 million dollars or 54 cents per share, against 538 million dollars over the comparable period of the year latest. Gold production represented 1.34 million ounces, down 8%, affected by the health crisis and Omicron. Adjusted EBITDA was $1.4 billion.
Verizon (-6%), the American telecom operator, announced for its first fiscal quarter revenues of 33.6 billion dollars, up 2.1% year-on-year, for a net profit of 4.7 billion dollars down 12% and an adjusted EBITDA of 12 billion down 1.1%. Adjusted earnings per share were $1.35 for the quarter ended compared to $1.36 in the first quarter of 2021. Market consensus was $1.34 in adjusted earnings per share for $33.53 billion in revenue .
Schlumberger (+5%), the oil services giant, published a quarterly profit above market expectations and reported a 40% increase in its dividend. Quarterly net income was $510 million and 36 cents per share, compared to $299 million in the comparable period last year. Excluding one-time items, adjusted earnings per share were 34 cents, versus a FactSet consensus of 33 cents. Revenue improved 14% year-over-year to $5.96 billion, also beating consensus.
HCA Healthcare (-16%), the Nashville hospital giant, stalls on Wall Street. For the first fiscal quarter, the group reported revenues of $14.94 billion, as well as a group share of net profit of $1.27 billion, or $4.14 per share. Adjusted EBITDA was $2.94 billion. Cash flow from operating activities amounted to 1.34 billion. A year earlier, revenue was less than 14 billion and profit was 1.42 billion. The consensus was $4.25 in adjusted earnings per share on $14.74 billion in revenue.
Kimberly Clark (+9%), the American player in consumer products, is expected to rise sharply on Wall Street. The group beat the profit consensus for the quarter and revised its forecasts upwards. For the first fiscal quarter, Kimberly posted net income of $523 million or $1.55 per share, compared to $584 million a year earlier. Adjusted earnings per share were $1.35, versus a FactSet consensus of $1.24. Revenues stood at 5.09 billion dollars, against 4.74 billion a year before and 4.92 billion consensus. The guidance for annual sales has been revised upwards, with organic growth now expected between 4 and 6%. Adjusted EPS is expected between $5.6 and $6.
gap drops by 17% on Wall Street, while the American clothing retailer has just warned about its sales and also announced the departure of the leader of the Old Navy chain, Nancy Green. Gap said it now sees first-quarter sales decline 11-15% from an anticipated 5%-9% decline in March. The group made no reference to its full-year outlook, which includes adjusted earnings in the range of $1.85 to $2.05 per share.