(Boursier.com) — Wall Street recovered sharply on Friday, continuing its trend from the day before. The S&P 500 now gains 1.36% to 4,060 pts, the Nasdaq 1.82% to 12,079 pts and the Dow Jones 1.17% to 32,146 pts. The barrel of WTI crude took 3% to $86.1. An ounce of gold advanced 0.3% to $1,726. The dollar index dropped 0.7% against a basket of benchmark currencies. Operators therefore seem to be getting used to the idea of a lasting austere policy from the Fed, after having speculated a little too quickly on an “accommodative pivot”.
According to today’s report, preliminary wholesale inventories for the month of July 2022 increased by 0.6% compared to the previous month, against 0.8% consensus and 0.8% a month earlier.
Moreover, the day after a new intervention by Jerome Powell, several Fed officials, including Charles Evans (boss of the Chicago Fed), Esther George (head of the Kansas City Fed) and Christopher Waller (board member governors) still speak out today.
Powell, head of the Fed, intervened yesterday at the 40th monetary policy conference of the Cato Institute. He took the opportunity to reaffirm the US central bank’s commitment to do what is necessary to bring inflation back to its target. He also indicated that “we would not have seen such inflation without the Covid”. According to him, the pandemic would have caused a diversion of services towards goods. The outbreak has also contributed to tight supply and a shrinking labor force.
Powell also confirmed that the Fed would continue its action “until the job is done”. He had already warned, during the Jackson Hole symposium, that the Fed would stay the course, at the risk of “some economic suffering”. Yesterday Thursday, he therefore reaffirmed that the central bank should act “strongly” against inflation, so that it does not stay above the target for too long. This is, according to the official, to avoid an inflation scenario such as that of the 80s…
Thus, the Fed remains “strongly determined” to control inflation. She hopes to achieve this without “very high social cost”, Powell said, referring to the fight against inflation under her predecessor Paul Volcker in the early 1980s, during which the Fed triggered a recession and the unemployment rate had exceeded 10%. “My colleagues and I are strongly committed to bringing inflation down,” added Powell, who believes “we can avoid the kind of very high social cost that Paul Volcker and the Fed had to resort to.”
According to the CME Group’s FedWatch tool, the current probability of another 75 basis point rate hike from the Fed on September 21, after the next monetary meeting, stands at 86%, down from 14%. chance for a 50 basis point rate hike. The current range on the federal funds rate is housed between 2.25 and 2.5%, after two consecutive increases of 75 basis points.
US Treasury Secretary Janet Yellen seized the opportunity of a factory visit Ford Michigan to tout the Biden administration’s economic accomplishments, which it deems better than people realize. It must be said that the general public perception of Joe Biden’s economic management, particularly regarding inflation, tends to weigh on the president’s approval ratings. Biden’s rating has nevertheless started to rise with the ebb in gas prices, notes CNBC, and the administration in place is also keen to claim a few victories before the ‘midterms’. “Taken together, the bipartisan Infrastructure Act, the CHIPS Act and the Cut Inflation Act have authorized one of the most significant investments our country has ever made,” Yellen said Thursday. “I firmly believe that they will help us achieve stable and sustainable growth and that they will move us towards a fairer and more resilient economy,” said the Treasury Secretary.
Values
Zscaler (+19%), the Californian cloud security group, jumped on Wall Street. The group has just published for its fourth fiscal quarter an adjusted profit above expectations, while its billings have soared. For the quarter ended, adjusted earnings per share were 25 cents, against consensus 20 cents and 14 cents a year earlier. Revenue reached $318 million, compared to $197 million a year earlier. Quarterly activity also exceeded the consensus by 4%. The outlook also looks very favourable. For fiscal year 2023, just begun, Zscaler forecasts revenue ranging from $1.49 billion to $1.5 billion, billings between $1.92 billion and $1.94 billion, as well as non-GAAP profit from operations of 173 to 176 million. The annual adjusted EPS is expected between $1.16 and $1.18.
DocuSign (+9%), the Californian group active in electronic signature and transaction management technologies, is climbing on Wall Street. The group has indeed just beaten the profit consensus for the quarter ended and strengthened its billing forecasts. For its second fiscal quarter, DocuSign posted adjusted earnings per share of 44 cents, compared to market consensus of 42 cents and 47 cents in the comparable period last year. Revenues totaled $622 million, down from $512 million a year earlier, and 3% better than consensus. The group finally raises its annual billing estimates, which now range from 2.55 to 2.57 billion dollars (2.53 billion consensus). Revenues are expected between 2.47 and 2.482 billion. The adjusted operating margin is expected between 16 and 18%.
Kroger (+5%), the American distribution group, is gaining height on Wall Street, after the publication of profits above market expectations for its second fiscal quarter. The group is also raising its annual profit forecasts. Over the period ended, like-for-like sales excluding gasoline increased by 5.8%, for an operating profit of 954 million dollars. Earnings per share were $1 and adjusted EPS was 90 cents. Annual adjusted earnings per share are expected between $3.95 and $4.05.
You’re here (+3%) would have provided production details to employees of the gigafactory in Nevada, indicates CNBC. People working in this factory tell CNBC that during a meeting, the new manager of the gigafactory gave hundreds of employees detailed information on production. The gigafactory would thus have manufactured 283,473 powertrains in the second quarter and would have recorded August production higher than all previous months, except October 2021. The factory in Fremont, Calif., would now have a capacity of 12,000 cars/week and has set itself the next target of 14,000 cars/week. The gigafactory is expected to produce 8,800 high-voltage batteries each week to support Fremont’s production targets… The factory in Brandenburg, Germany, reportedly recently reached the production level of 1,000 cars/week, and Tesla expects reaching 5,000 cars/week by the end of the year. The Austin, Texas plant is also said to have recently reached the production level of 1,000 cars/week.
You’re here is also on track to produce 442 Megapacks (large-scale lithium-ion batteries) in the third quarter. The gigafactory also reportedly manufactured 37,600 Powerwalls (home energy storage batteries) in the second quarter and is on track to ramp up production by 22% in the third quarter.
Finally, You’re here would consider opening a lithium plant in Texas to secure its supplies for its batteries for electric vehicles, according to a document filed with state authorities.
T-Mobile US (stable), a strong generator of free cash flow, has announced a share buyback program worth $14 billion, valid until September next year.