(Boursier.com) – The American rating fell heavily on Tuesday. The S&P 500 thus lost 1.37% to 4,023 pts, the Dow Jones 1.33% to 33,376 pts and the Nasdaq 1.65% to 11,592 pts, while operators are worried about the growing geopolitical risk as well as the prospect lasting Fed monetary austerity. Flagship retailers’ mixed financial releases walmart And Home Depot are also weighing on market sentiment. On the Nymex, a barrel of WTI crude fell 0.6% to $76. The ounce of gold stabilizes at $1,849. The dollar index gained 0.3% against a basket of benchmark currencies.
Wall Street was closed yesterday Monday for ‘Presidents Day’, but the agenda for the week is quite extensive. The US economy is recovering, according to data from PMI indicators released today. Thus, the preliminary US composite PMI for February reached a level of 50.2, above 50 and therefore in expansion territory, whereas it was expected at 47.6 according to FactSet. The manufacturing index stands at 47.8 against 47.2 consensus. The services indicator came in at 50.5 versus the FactSet consensus of 47.
U.S. home resales for the month of January 2023 came out at a pace of 4 million units, versus a FactSet consensus of 4.1 million and a revised level of 4.03 million for the month prior. These resales fell by 1.5% compared to the previous month and by 34% over one year.
The State Street Investor Confidence Index and the Fed’s FOMC Minutes will be released tomorrow Wednesday. U.S. GDP figures, jobless claims, the Chicago Fed National Activity Index, the Kansas City Fed Manufacturing Index and the weekly U.S. Domestic Oil Inventories report will be announced on Thursday. Household income and spending, new home sales and the University of Michigan’s U.S. Consumer Sentiment Index are due Friday. Several Fed speakers are still expected during the week, including John Williams on Wednesday, Raphael Bostic on Thursday and Loretta Mester on Friday.
The hypothesis of a slightly more aggressive rate hike next month is gaining momentum. Going a bit beyond the hitherto standard narrative, St. Louis Fed boss James Bullard said he wouldn’t rule out a 50 basis point hike in March and was in favor of the imminent achievement of a key rate between 5.25 and 5.50%. He also claimed he argued for a 50 basis point hike at the February meeting. Bullard said more hikes were needed to keep inflation expectations low. The Cleveland Fed’s Loretta Mester also indicated recently that she saw a ‘compelling case’ for a 50 basis point hike at the February FOMC meeting. Mester said the incoming data did not change his view that rates should rise above 5% and be held there for some time to ensure inflation returns to 2%. She noted the tightness in the labor market, saying wage growth was around 1 to 1.5 percentage points above the level consistent with price stability.
Factors such as strong labor market data and persistent inflation, have led some economists to worry even more about a policy error… The FedWatch tool, meanwhile, shows a 76% probability of a rate hike of 25 basis points on March 22, on the occasion of the future monetary meeting, and a probability of around 24% of a gesture of 50 basis points, which would bring the range on the rates of the fed funds between 5 and 5.25%.
As the anniversary of the outbreak of war in Ukraine approaches, Vladimir Putin on Tuesday accused NATO and the West of stoking the conflict. The Kremlin boss also announced that Moscow was suspending its participation in the New START treaty on strategic nuclear weapons…
On the macroeconomic front in Europe, the dynamism of services supported the growth of activity in the euro zone with a composite PMI of 52.3 in February. In the United Kingdom, private sector activity also showed a jump with a flash composite PMI of 53 in February against 48.5 in January. In Germany, investor sentiment continued to improve in February according to the survey by the ZEW economic research institute. These good European figures are fueling fears of a prolonged monetary tightening by the ECB…
In business news on Wall Street, walmart, Home Depot, Medtronic, Coinbase, PublicStorage, Palo Alto Networks, Chesapeake Energy Or Ingersoll-Randannounce their quarterly financial results on Tuesday. Nvidia, TJX, Baidu, eBay, Lucid Group, Garmin, Mosaic, Etsy And NetApp publish on Wednesday. THURSDAY, Ali Baba, intuitive, Booking Holdings, AmericanTower, Moderna, NetEase, monster drink, vmware, Autodesk, block, Keurig Dr Pepper, Warner Bros. Discovery, Newmont and many more will join the party. Friday, Berkshire Hathaway is expected.
Values
walmart (+1%) is holding firm on Wall Street. However, the American retail giant did not really convince with its forecasts. The group reported strong demand in the quarter ended Jan. 31, posting total revenue of more than $164 billion, a 7.3% increase from a year ago. Analysts had estimated revenue at $159.8 billion. Quarterly net profit soared 76% to $6.28 billion, helped by unrealized gains in stocks and other investments.
walmart however, on Tuesday delivered below-consensus full-year earnings estimates, saying it was cautious about the economic outlook for 2023 and that consumers were likely to continue buying items at lower prices – which could put pressure on its margins. The group, which operates more than 5,000 stores in the United States, uses its power to negotiate better prices with suppliers and face discount competition. However, discounts, along with weak consumer morale and Walmart’s decision to raise employee salaries, are expected to weigh on its margins this year. Walmart is forecasting fiscal 2024 earnings of $5.90 to $6.05 per share, versus analyst estimates of $6.50.
Home Depot (-5%), the American giant of the distribution of furniture and household equipment, lost ground on Wall Street following the publication of an annual profit guidance below expectations, in a context of rising costs and falling demand. Home Depot will have to invest $1 billion in wage increases in North America. Sales for the fourth quarter of fiscal 2022 were $35.8 billion, an increase of 0.3%. Comparable sales for the fourth quarter of fiscal 2022 decreased by 0.3%. Net income for the fourth quarter of fiscal 2022 was $3.4 billion, or $3.30 per diluted share, compared to net income of $3.4 billion for the same period. the 2021 financial year.
The 2023 forecasts are therefore very cautious. Comparable sales and revenue will be roughly flat compared to fiscal 2022, according to the group. The operating margin rate is expected to be around 14.5%, which reflects around $1 billion in additional annual compensation for ‘front-line hourly associates’. The decline in diluted earnings per share would be in the ‘mid’ single digit, ie a decline of around 5%.
Medtronic (+1%), the medical device maker, beat consensus estimates for the fiscal third quarter on Wall Street. The Dublin-based group posted net profit of $1.22 billion, or 92 cents per share, for the quarter ending January 27, compared with $1.48 billion a year earlier. Adjusted earnings per share were $1.30, versus a FactSet consensus of $1.27. Sales fell from $7.76 billion to $7.73 billion, also ahead of the FactSet consensus of $7.54 billion. Chief Executive Geoffrey Martha said revenue was boosted by strong performance in the cardiovascular and neuroscience portfolios, in diabetes markets outside the United States and by improved product availability. Medtronic expects fourth-quarter EPS to be between $5.28 and $5.30.
Ingersoll-Rand (-2%), the American supplier of industrial products, announced for its fourth quarter revenues of 1.62 billion dollars, up 14%, including 19% organic growth. Quarterly orders were fairly flat at 1.48 billion. Group net profit was $217 million or 53 cents per share, while adjusted profit was $295 million or 72 cents per share. The consensus was 62 cents adjusted EPS for $1.54 billion in revenue. Quarterly Adjusted EBITDA increased 23% to $420 million, for a 25.9% margin up 180 basis points. Revenue growth for the full year 2023 is expected between 7 and 9%, for an adjusted Ebitda of 1.57 to 1.63 billion dollars, up from 9 to 14%. 2023 adjusted EPS is expected between $2.48 and $2.58, up 5 to 9%.
General Mills (+4%) raised its 2023 forecast to reflect the increase in its prices and performance. The Cheerios, Nature Valley and Blue Buffalo branded group now expects adjusted earnings per share growth of 7% to 8% in constant currency and sales growth of around 10%. General Mills intends to continue investing in its North American retail business, digital capabilities, strategic revenue management and supply chain digitization. In its pet food division, the firm expects to benefit from the renovation and innovation of its Wilderness dry dog food line, a trial of a new range of refrigerated dog food for Blue Buffalo dogs, innovations and novelties on its natural treats for animals (…). It also plans to expand its Blue Buffalo offering in China.
Meta (+1%) seems to be inspired greatly by Elon Musk’s Twitter. Thus, the group of Mark Zuckerberg will offer a subscription service for verified accounts for Facebook and Instagram, which is obviously reminiscent of Twitter Blue. Zuckerberg said over the weekend that Meta is rolling out paid verification for Facebook and Instagram. The CEO of Meta explained that the “Meta Verified” subscription service would be offered for $11.99 monthly on the Web, or $14.99 per month on mobile. This new formula, which will be deployed to start in Australia and New Zealand this week, aims according to Zuckerberg to improve the authenticity of profiles and exchanges, as well as the security of services. Incidentally, it is an additional flow of income for the group, which is struggling to maintain its profitability in the face of the efforts made for its development of the metaverse.
You’re here (-2%) would consider acquiring the Canadian firm Sigma Lithium, according to Bloomberg. People with knowledge of the matter quoted by the agency indicate that the owners of Sigma Lithium, which capitalizes approximately 4.2 billion Canadian dollars or 3.1 billion US dollars, are considering a sale. The filing is one of several options for Tesla in the battery metal mining segment. The electric vehicle maker led by Elon Musk is said to have discussed with potential advisers a possible bid for ‘Sigma’, whose stock price has already doubled since last summer.