Wall Street sticks to its guns, ahead of the Fed

(Boursier.com) — Wall Street approaches the prospect of the Fed’s monetary verdict quite calmly today – expected at 8 p.m. before a press conference by Jerome Powell at 8:30 p.m. The Nasdaq takes another 0.2% before the market and the S&P 500 also 0.2%, while the Dow Jones consolidates by 0.2%. On the Nymex, a barrel of WTI crude gained 0.9% to $70. The ounce of gold advances by 0.6% to $1,970. The dollar index lost 0.2% against a basket of currencies. Relative confidence therefore still seems to dominate, while the S&P 500 has, it should be recalled, very recently moved into “bull market” territory, recovering more than 20% from its October lows.

It must be said that yesterday, the US inflation figures were reassuring, with a sharply slowing CPI and the lowest since March 2021. The consumer price index for the month of May was up by 0.1% compared to the previous month and 4% over one year, while the consensus was +0.2% from one month to the next or 4.1% over one year. Excluding food and energy, it increased by 0.4% compared to the previous month and by 5.3% year-on-year, in line with the market consensus.

The producer price index for the same month of May declined by 0.3% compared to the previous month, against a market consensus of -0.1%. Thus, the indicator progressed by only 1.1% over one year against 1.5% of the FactSet consensus. Excluding food and energy this time, the producer price index rose as expected by 0.2% compared to the previous month, an increase of 2.8% year-on-year.

Markets are expecting a pause from the Fed on Wednesday. It is not impossible, however, that the Fed will then resume raising rates for the July 25-26 meeting, with a 58% probability of a range of 5.25-5.5% on the fed funds rate. ‘, which would correspond to a tightening of a quarter point.

The rhetoric from Fed members since May’s meeting has been more “hawkish” than expected, but the head of the US central bank has put the record straight. Fed Chairman Jerome Powell said last month that given the extent to which the Fed had raised rates, it could afford to examine the data and changing outlook to make careful assessments. . Fed Governor and Vice Chairman-designate Philip Jefferson noted that skipping a rate hike in June would allow the FOMC to observe more data before making a decision on the extent of further firming. policy.

Wall Street therefore does not expect much from the monetary decision of the Fed this evening, since a status quo is given for almost certain. The fed funds rate should therefore remain between 5 and 5.25%, this scenario displaying a 91% probability according to FedWatch. As the Fed does not like to rush the markets, it should therefore opt for the long-awaited “pause”. Traders will therefore rather follow the famous ‘dot plot’ of the Fed’s Summary of Economic Projections (SEP), which presents in the form of a dot chart the expectations for the rates of the various officials of the American central bank for the end of the year and the following two years. In March, the SEP suggested that rates would not go higher. From now on, it is envisaged that the bank will choose to carry out yet another monetary tightening in July, while the US economy remains particularly resilient and the work to bring inflation back towards the 2% target is not not finished.

Local economists expect the famous ‘dot plot’ to show a possible extension of the rate hike cycle, even if some officials are expected to signal with their ‘dots’ the possibility of an end to the tightening. In this context, with Fed members seeming relatively divided on the July decision, Jerome Powell’s comments during his press conference tonight could prove decisive.

In business news on Wall Street today, the homebuilder Lennar will publish its final accounts after closing. This is the only outstanding publication today. Note that the firms Adobe, Jabil Or Kroger announce their results tomorrow.


Apple. Seven Chinese companies are helping design Apple’s Vision Pro mixed reality headset, according to the South China Morning Post. Citing an analysis by consultancy Wellsenn XR that concludes the cost of components and materials for the Vision Pro would be $1,590, SCMP reports that Apple’s suppliers include Luxshare Precision Industry, Cowell E Holdings, Shenzhen Desay Battery Technology , Goertek, Shenzhen Zhaowei Machinery & Electronics Co, Shenzhen Everwin Precision Technology, and Lingyi iTech Guangdong Co. The SCMP does not specify when the analysis in question was published. The article adds that a Commercial Times report citing Morgan Stanley research listed other vendors, including Largan Precision Co, Genius Electronic Optical Co, GIS-KY, Taiwan Semiconductor Manufacturing, Samsung Electronics, LG Electronics and Sony.

Apple reached a new all-time high on Wall Street the day before yesterday, for a market capitalization of nearly 2.9 trillion dollars. The title had reacted weakly, however, on June 5 during the keynote of the WWDC 2023 developer conference, which included the long-awaited presentation of the Vision Pro mixed reality headset. Specialists pointed to the high price of the headset, at $3,499, compared to much cheaper rival products from Meta. The fact that Apple did not utter the magic words of artificial intelligence during the keynote also upset some fans. But since then, Apple has performed very well on the stock market, supported by investors’ attraction to technological ‘megacaps’.

You’re here remains watched after its incredible bull run of 13 consecutive sessions, up more than 40% over this period. The electric car maker has slightly increased the price of its Model Y vehicle in the United States, which could be seen as a sign of increased confidence in future demand.

Alphabet. EU antitrust regulators have accused the Google unit of anti-competitive practices in its digital advertising business, adding that it may have to sell off some of that business to address such serious concerns. Thus, Margrethe Vestager Hansen, vice-president of the European Commission, in charge of competition issues, says she fears that Google has distorted competition in “adtech” to favor its AdX platform.

AMD counterattack on an AI “superchip” segment dominated by Nvidia. Yesterday, AMD unveiled as expected its most advanced chip to date, targeting generative AI technology. The MI300x chip can use up to 192 GB of memory. These powerful memory capacities mean that AMD’s new chip could be applied to large AI language models, the so-called ‘LLM’. These graphics processing units therefore have the capacity to power new AI platforms such as ChatGPT. The Californian group from Santa Clara, led by Lisa Su, therefore intends to get its share of the gigantic cake of AI chips. Su spoke yesterday about “incredibly powerful” technology, confident in his group’s abilities against Nvidia.

Amazon Web Services plans to use these new AI chips fromAMD, according to Reuters. According to an AWS executive, although the group has made no public commitment to use AMD’s new MI300 chips in its cloud services, it is considering doing so. In an interview, Lisa Su, AMD’s chief executive, said the company plans to offer a menu of everything needed to build the kinds of systems to power services similar to ChatGPT, as cloud customers computing will want to be able to customize what they need in their data centers.

Comerica, the Dallas regional financial institution, said yesterday that it plans to exit the mortgage financing business by year-end, in a bid to improve the loan-to-deposit ratio and the capital efficiency. The bank, in a presentation at a Morgan Stanley conference, said the exit would help mitigate the effects of seasonality and cyclicality on its lending portfolio. These announcements boosted prices last night, when the file had been very attacked during the recent period of ‘banking stress’. The group also reassured about its net interest income for the second quarter, expected at the bottom of the range of the previous guidance, while the markets feared visibly worse.

UnitedHealth, a U.S. health care and insurance company, told an investor conference that medical costs at its health insurance unit could be higher than expected, sending stock tumbling on Wall Street this day. The announcements are also putting pressure on other stocks in the health insurance sector today. “More older people are just more comfortable accessing services for things they might have put off a bit like knees and hips,” the health insurer said.

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