(Boursier.com) – Wall Street returns to the green on Tuesday, but remains feverish. The S&P 500 climbed 0.4% to 4,137 pts and the Dow Jones 0.17% to 32,972 pts, while the Nasdaq advanced 0.71% to 12,147 pts. The markets remain very cautious, affected by the prospect of accelerated monetary firming, but some purchases deemed cheap are being attempted. The warning launched by Target on its profits, which had initially sealed the sector of the distribution, seems already integrated. On the Nymex, a barrel of crude rose 1.3% to $120. An ounce of gold gained 0.5% to $1,853. The dollar index returned 0.1% against a basket of reference currencies. Bitcoin remains capped by $30,000.
In US economic news on Tuesday, the US international trade deficit in goods and services for the month of April 2022 came out at $87.1 billion, against a consensus of -90 billion dollars and a revised level at -107.7 billion dollars for the prior month. Consumer credit figures for April will be revealed at 9 p.m. (consensus +35 billion dollars according to FactSet).
On the side of the Fed this time, the usual players are in a ‘quiet period’ before the monetary meeting (FOMC) of June 14 and 15, which should be marked by a new monetary tightening of half a point in order to counter the inflation. Faced with this eagerness of the US central bank to toughen its tone and this heavy inflation, fears are still focused on the possible scenario of a painful economic landing. Fear of a global acceleration in monetary tightening is looming as Australia’s central bank surprised today by raising its main interest rate by half a point, warning that the move could continue. The meeting of the Governing Council of the European Central Bank (ECB) will take place on Thursday. On Friday, the US consumer price figures for the month of May will be published (consensus +8.2% for the unadjusted CPI, year-on-year). In the United States, the markets expect rate hikes of half a point this month and in July and of almost 200 basis points by the end of the year, while in the euro zone, a increase of 133 points is expected over the same period.
Regarding China, which is continuing its “deconfinements”, note that the American Secretary of Commerce, Gina Raimondo, estimated on CNN that a lifting of customs tariffs on certain imported Chinese products made sense in order to fight against inflation. It ruled that certain customs tariffs linked to national security (steel or aluminum for example) should be kept, but that others could be reduced on consumer products or bicycles. Biden intends for his part to discuss this subject of the “tariffs” imposed on China with the Secretary of the Treasury, Janet Yellen. Katherine Tai, US Trade Representative, said tariffs should stay in place to force China to review its abusive trade practices.
On the oil markets, note that Goldman Sachs has told its clients that it expects Brent to average $140 a barrel between July and September. According to GS, consumers should even ‘feel’ prices at the pump similar to those of a Brent at $160…
Elsewhere in the world, German industrial orders for the month of April fell by 2.7% in seasonally adjusted data, unexpectedly, while the consensus was counting on +1%. Spanish industrial production fell by 0.4% in April against -1.4% consensus. The German construction PMI came in below expectations at 45.4 in May. The Sentix index of economic sentiment for the euro zone for June came out negative at 15.8, a level that was, however, above expectations. The final British services PMI for May finally came in at 53.4 versus market consensus of 51.8.
A few quarterly financial publications are also expected today on Wall Street, notably with JM Smucker, Caseys General Stores, United Natural Foods, Guidewire Software, Verint Systems and Chico’s FAS.
Values
Target (-2%), rival US discount retailer of walmart, corrects on Wall Street after profit warning. The title had already lost a third of its value this year. The group thus evokes the excess of inventory and reduces its guidance, now considering for the second quarter an operating margin close to 2%. Target on Tuesday lowered its quarterly margin forecast released a few weeks earlier and said it should offer deeper discounts and stock more essential items as inflation depresses consumer spending. The surprise guidance revision is a new blow for the company, which already signaled a sharp drop in quarterly profits in May. With soaring inflation and rising gas prices, consumers are indeed changing their shopping habits, catching many retailers off guard and forcing them to offer more discounts.
Target said it would focus on eliminating excess inventory in the second quarter, canceling orders and accelerating parts of the supply chain that could be affected by “external volatility”. The company also prioritizes categories such as food, beverages and household essentials, over discretionary items such as home goods. Target’s strategy to keep much of its products affordable is currently proving costly for the retailer, which would now have to raise prices to offset unusually high shipping and fuel costs. “While these decisions will result in additional costs in the second quarter, they will result in improved profitability in the second half and beyond,” said Brian Cornell, Target’s chief executive.
The retailer now expects an operating margin of around 2% in the second quarter, down from a previous estimate of 5.3%. It forecasts margins around 6% for the second half, while maintaining its sales targets for the year.
J. M. Smucker (+5%) has also just issued a warning on the sidelines of its financial publication for the fourth fiscal quarter, which does not surprise the market. The American food group lowered its annual guidance on the back of a recall of its Jif peanut butter. The group also discusses inflation and supply chain issues. Over the quarter ended, sales increased by 6%. For the fiscal year, revenues amounted to 8 billion dollars, fairly stable. Adjusted earnings per share for the quarter ended rose 18% to $2.23. Annual adjusted EPS fell 3% to $8.88.
Kohls jumped 11%. The American chain of stores, would, according to the sources of the Wall Street Journal, in advanced and exclusive discussions with Franchise Group. The latter could thus acquire Kohl’s as part of an operation valued at 8 billion dollars. People familiar with the matter told the WSJ that the exclusivity period with Franchise Group is expected to last several weeks. The article also recalls the rumors of last week concerning the submission by Franchise of an offer valuing Kohl’s approximately $60 per title.
JetBlue (stable) has submitted an amended takeover offer of Spirit Airlines, of a total aggregate consideration of $31.5 per share, compared to a previous offer close to $30 per share. According to the new terms of the proposal, the current shareholders of Spirit would therefore obtain $31.5 in cash per share, including $30 at the closing of the deal and a prepayment of $1.5. The move comes days before a shareholder vote expected on June 10 on a rival offer from Frontier Group. Yesterday Monday, JetBlue raised the amount of the cancellation fee by $150 million, to $350 million now, payable to Spirit shareholders in the event the deal fails on antitrust grounds. The battle between ‘low-cost’ airlines is therefore intensifying in the United States. Last month, Spirit rejected JetBlue’s earlier proposal, saying it had little chance of gaining approval from regulators. Frontier, for its part, has agreed to pay $250 million if its bid fails.
Apple (+1%) held yesterday Monday its traditional annual conference of developers, the WWDC. The Apple firm took the opportunity to unveil a new version of CarPlay, its software dedicated to the automobile, which will make it possible to personalize the display of the dashboard of equipped vehicles, thus confirming its desire to play a role growing in the mobility market. The new version of CarPlay will, among other things, display the vehicle’s speed and range. Apple said that several manufacturers, including FordNissan, Honda and Renault planned to use this new software on cars marketed from next year.
Apple has also announced that it has “completely remodeled” its MacBook Air laptop around its new M2 processor, which it presents as 35% faster than its predecessor, the M1. The M2 will also power the new 13-inch MacBook Pro next month. Among the many new features unveiled on Monday are the ability to edit a message sent from the iMessage application and a function called “Safety Check” (security check) to disable access to all sensitive information on all Apple devices. of a user. Apple has also announced the launch of an “Apple Pay Later” service, which will allow you to pay for your purchases of group products in four instalments free of charge. This last announcement makes the title decline block on Wall Street, the group offering its Afterpay service in this area. Affirmanother player in the sector, should correct on the stock market.
Interactive Platoon (stable), manufacturer of exercise bikes, announced last night the departure of its chief financial officer, Jill Woodworth, replaced by Liz Coddington, who came from Amazon.
Twitter (+1%) holds firm, while Elon Musk threatens to withdraw his offer of 44 billion dollars for the acquisition of the social media network if he does not obtain precise data concerning the ‘bots’ and fake accounts populating the platform.
robinhood yields 6%, while the Wall Street Journal indicates that the policeman of the American financial markets, the Securities & Exchange Commission, would consider plans to increase competition in the execution of investor orders.