(Boursier.com) — Wall Street is trending slightly in the red this Friday, the S&P 500 dropping 0.20% to 5,231 pts, the Dow Jones 0.40% to 39,622 pts and the Nasdaq 0.17% to 16,374 pts. Tesla, Nike and Lululemon are weighing on the trend. On the Nymex, a barrel of WTI crude lost 0.1% to $81. An ounce of gold returns 0.5% to $2,173. The dollar index gained 0.9% against a basket of currencies.
Yesterday evening, the American stock market, boosted in particular by Micron, performed quite well, the day after well-received announcements from the Fed. The American central bank seemed to maintain its stance regarding further rate cuts this year, despite recent data that was a little less positive than expected regarding inflation.
Jerome Powell, for his part, judged that despite recent statistics, the narrative relating to a gradual decline in inflation had not changed. Powell, along with the Fed’s Michelle Bowman, Philip Jefferson, Michael Barr and Raphael Bostic, speak today. Powell confirms that the recent somewhat higher inflation figures have not changed the overall underlying scenario of a gradual easing of price pressures. He also maintains that the Fed anticipates a soft landing for the American economy. It also confirms the central bank’s forecasts, counting on three rate cuts this year, while inflation tends to ease and the economy remains strong.
The Fed, let us recall, maintained its interest rates unchanged the day before yesterday between 5.25 and 5.50% on ‘fed funds’, the fifth consecutive monetary status quo. This week’s announcements still call for three quarter-point rate cuts later this year. For now, rates remain at the highest since 2001. The Fed does not expect it will be appropriate to narrow the target range until it gains greater confidence in a sustainable return inflation towards 2%. Powell clarified, during his press conference on Wednesday, that the latest inflation figures had therefore not called into question the scenario of continued easing of prices in the United States. However, the central bank does not consider the battle won.
Quoting…
Nine FOMC officials who presented their forecasts on Wednesday estimate that the central bank will cut rates three times this year. Five officials judge that two reductions will be enough. One participant forecasts a rate cut of 100 basis points over the year. Two members of the FOMC, on the other hand, are considering a single rate cut, while the last two are counting… on a status quo all year.
The Fed considers inflation still high. Its new forecasts show that the consumer price index excluding food and energy is now expected to rise by 2.6% this year compared to 2.4% previously. Adjusted inflation should fall to 2.2% in 2025 and 2% in 2026… American growth this year is expected at 2.1%, compared to 1.4% forecast in December. This economic expansion is expected at 2% in 2025 and 2026. The unemployment rate should be at 4% at the end of the year according to the Fed, compared to 4.1% previously forecast in December and 3.9% in February. . The unemployment rate is forecast at 4.1% in 2025 and 4% in 2026.
There will be no notable economic statistics this Friday on Wall Street. Yesterday, US weekly jobless claims for the week ended March 16 stood at 210,000, compared to a FactSet consensus of 214,500. The Philadelphia Fed’s manufacturing index for March came in at +3.2, compared to a consensus of -3 measured by FactSet… The preliminary US composite PMI index for March 2024 stood at 52.2, compared to a consensus of 52.
The manufacturing index was 52.5 against 51.8 consensus, while the services indicator stood at 51.7 against 52 market consensus…
Resales of existing homes in the United States for the month of February 2024, measured by the National Association of Realtors, stood at 4.38 million units against 3.93 million consensus. This represents an increase of 9.5% compared to the month of January!
The Conference Board’s leading indicators index for the month of February 2024 surprised with a slight increase of 0.1% compared to the previous month, against a market consensus of -0.2% and a decrease of 0.4%. a month ago.
Values
FedEx (+8%) jumps on Wall Street. The group in fact exceeded profit expectations for the closed quarter and also announced a $5 billion share buyback program. Adjusted earnings per share for the quarter ended at $3.86, compared to a consensus of $3.45. Adjusted profit was $966 million. Revenues were $21.7 billion, down 2.1% year-on-year, compared to $22 billion consensus. The Memphis group has tightened its earnings estimates, counting for fiscal 2024 on earnings ranging from $17.25 to $18.25 per share, compared to previous guidance ranging from $17 to $18.5. The group also indicated that it would know within a few weeks if it has a new contract with the USPS, while the current contract expires at the end of September.
Nike drops by 9% on Wall Street. The sports footwear and accessories giant posted earnings per share of 77 cents for the period ended at the end of February, its third fiscal quarter, compared to a consensus of 74 cents. Revenue was $12.43 billion, compared to the $12.31 billion consensus. The gross margin, on the other hand, came out a little lower than expected at 44.8%, despite an increase of 150 basis points. Revenue in China, at $2.08 billion, was better than expected. Quarterly net profit fell 5% to $1.2 billion, while diluted EPS fell 3%. Note that earnings per share include 21 cents of restructuring charges.
“We are making the necessary adjustments to drive Nike’s next chapter of growth,” said John Donahoe, group chief executive. “We are encouraged by the progress we have seen, as we build a multi-year cycle of new innovations, refine our brand storytelling and work with our wholesale partners to advance and grow the market.”
Lululemon (-18%), star of yoga clothing, announced last night quarterly accounts above market expectations, but disappointing guidance. Revenues for the first fiscal quarter are expected to be between $2.175 billion and $2.2 billion, growing 9 to 10%, for diluted earnings per share ranging from $2.35 to $2.40. The consensus was for 2.25 billion in revenue and $2.55 in EPS. The Canadian group forecasts a turnover for the entire fiscal year 2024 of between 10.7 and 10.8 billion dollars, against 10.9 billion consensus. Full-year earnings are expected to be between $14 and $14.2 per share. For the quarter ended January, fourth quarter 2023, revenue was $3.2 billion, up 16% year-over-year, compared to a consensus of $3.19 billion. Adjusted earnings per share were $5.29, versus $5 consensus.
You’re here (-2%). According to the Bloomberg agency, the group has reduced its production in China. The agency cited people familiar with the matter. This reduction in production revives fears of a slowdown in demand and those linked to the impact of intense competition on the main global automobile market. The Texan manufacturer therefore reportedly asked employees at its Shanghai factory earlier this month to reduce production of the Model Y and Model 3, the two vehicles manufactured by Tesla in China, by working five days a week instead of six. usual days and a half. Production lines operate in two shifts of 11.5 hours per day, which would remain unchanged. According to Bloomberg’s sources, production was reduced from the beginning of the month, and staff did not receive a clear indication of when production would return to normal.
Some production lines at the Shanghai site, including battery workshops, would be subject to longer suspensions. Tesla has reportedly asked its staff and some suppliers to prepare for extended production limits through April, Bloomberg also reports. Elon Musk’s group is facing increasingly tough competition in China, from BYD but also from many other electric vehicle manufacturers who produce more affordable vehicles. The group delivered just over 131,800 units in the first two months of the year, a drop of 6% year-on-year according to local data from the CPCA.
The SPAC Digital World Acquisition (-6%) listed on Wall Street must vote on a merger agreement with Donald Trump’s social media firm Trump Media & Technology Group, owner of the Truth Social platform. If such an operation is approved, the former president of the United States would hold a stake of nearly 60% in the combined entity. The basis of the valuation of the merged entity being in the order of $6 billion, Trump would find himself at the head of a stake of more than $3 billion. Voting for the operation is already virtually assured, according to Fortune. The deal has been in the works for a few years and has hit several obstacles along the way, including allegations of insider trading, but so it should finally come to fruition.
Reddit (-6% this Friday) soared last night by 48.3% on the NYSE, for its IPO on Wall Street, over $50 for a market capitalization of approximately $9.5 billion (taking into account account of stock options and restricted shares). The platform’s IPO had already been priced at the top of the range. 22 million shares were sold at $34 each by the group and its existing shareholders. The indicative range was between $31 and $34. The proceeds of the operation are $748 million. The initial valuation was $6.4 billion. Excluding securities sold by existing shareholders, Reddit raised gross proceeds of $519 million. The operation was led by Morgan Stanley, Goldman Sachs, JP Morgan and Bank of America.