(Boursier.com) — Wall Street erased its initial losses to finish in the green on Friday. The S&P 500 rose 0.40% to 4,604 pts, the Dow Jones gained 0.37% to 36,249 pts and the Nasdaq rose 0.45% to 14,404 pts. The latest US employment figures came out stronger than expected, while operators were instead waiting for confirmation of the easing of the labor market, leaving more room for maneuver for the Fed to ease its policy next year. However, job creation remains quite significant for the moment. The more positive view of the issue consists of considering that this report removes the specter of a painful economic landing…
The US Department of Labor reported non-farm job creation in November at 199,000, compared to a consensus of around 180,000 and a previous reading of 150,000. The American unemployment rate fell to 3.7% in November, compared to a consensus of 3.9% and 3.9% in October. Job gains occurred in the health care and government segments. Employment also increased in the manufacturing sector, reflecting the return of workers from a strike (UAW auto union). Retail employment has declined. Job creations in the private sector numbered 150,000 according to today’s report, in line with expectations. Manufacturing job creations were 28,000. The labor force participation rate has not really changed at 62.8%. The average hourly wage increased a little more than expected, by +0.4% compared to the previous month and +4% year-on-year.
The change in total nonfarm payroll employment for September was revised downward by 35,000, from +297,000 to +262,000, and the change for October remained at +150,000. With these revisions, employment in September and October combined is 35,000 lower than previously reported.
The preliminary index of American consumer sentiment measured by the University of Michigan for the month of December stood at 69.4, well above the market consensus which stood at 61.6. A month earlier, the indicator was only 61.3. The one-year inflation expectations index linked to the December confidence index fell to 3.1%, compared to the Bloomberg consensus of 4.2% and 4.5% a month earlier…
On the Nymex, a barrel of WTI crude regained 3% to $71.30. The dollar index advances 0.2% against a basket of currencies. On the bond markets, the yield on the 2-year T-Bond is 4.69%, compared to 4.23% on the 10-year and 4.32% on the 30-year.
Values
Broadcom (+2.4%), the American chip designer beat the profit consensus for its fourth fiscal quarter, but its growth appears extremely weak. Over the period, adjusted earnings per share were $11.06, above consensus, while revenues stood at $9.3 billion (+4%), a little short compared to market expectations. . CEO Hock Tan said the results were “supported by investments in accelerators and network connectivity for hyperscaler AI”. The company also recently finalized its acquisition of VMware, expected “transformational” operation. The Californian chipmaker, however, forecasts annual revenue below Wall Street estimates, in the face of weak corporate spending and competition. For fiscal 2024, Broadcom expects revenue of approximately $50 billion, including VMware. Analysts expected on average 52.5 billion. Annual adjusted Ebitda is expected to be around 60% of revenue, which would represent an increase of almost $7 billion. The group also expects approximately $1 billion in transition costs related to VMware.
Lululemon (+5.3%). The yoga clothing star which has just joined the S&P 500 index has published quarterly accounts above market expectations, but cautious guidance… Fourth quarter revenues are anticipated between $3.135 and $3.17 billion, against a consensus of 3.18 billion. The Canadian group forecasts a turnover for the whole of 2023 of between $9.549 and $9.584 billion. Full-year earnings are expected to be between $12.34 and $12.42 per share. For the quarter ended October, revenue was $2.2 billion, up 19% year-over-year, compared to a consensus of $2.19 billion. Adjusted earnings per share were $2.53, compared to $2 a year before and around $2.3 consensus. North American revenues increased by 12% compared to last year, while international activity soared by 49%! Total like-for-like sales increased 13%.
Taiwan Semiconductor (+1%), the world’s largest supplier of custom chips, a major supplier of Nvidia (+1.9%) and Apple (+0.7%), recorded a 7.5% drop in turnover in November to 206 billion Taiwan dollars (around 6.6 billion dollars). After an increase in October, activity is therefore starting to decline again. The 11-month turnover fell 4.1% from a year earlier to 1.99 trillion Taiwan dollars. Yesterday, the sector benefited from market forecasts revised upwards ofAMD (+0.7%) concerning the specific segment of AI chips. Note that Taiwan Semi notably manufactures AMD’s latest AI chip (MI300). These November figures from the Taiwanese production subcontractor therefore contrast with the spectacular forecasts of groups such as Nvidia or AMD…
The Cooper Companies (-2.9%), the American designer of medical equipment, specialist in ophthalmology, announced yesterday evening, for its fourth fiscal quarter, results in line with market expectations. Quarterly revenues were $927 million, up 9.3% year-over-year, while adjusted earnings per share were $3.47 versus $2.75 a year earlier. These figures come out very close to the average analyst estimates. For the full year, revenues represented $3.59 billion, an increase of 9% compared to last year and 11% at constant currencies. For fiscal 2024, revenue is expected to be between $3.809 billion and $3.877 billion, with organic growth of 6% to 8%. Adjusted diluted earnings per share are expected to be between $13.6 and $14.
DocuSign (+4.8%), the Californian electronic signature giant published a better than expected third quarter. Adjusted earnings per share were 79 cents versus 63 cents consensus. Revenues totaled $700 million, growing 9% year-over-year. Subscription revenue was $682 million, an increase of 9%. Professional services and other revenues were $18 million, a decrease of 16%. Billings were $692 million, up 5%. Non-GAAP gross margin was stable at 83%. Cash, cash equivalents, restricted cash and investments were $1.7 billion at the end of the quarter. For the fiscal year, revenues are expected between $2.746 billion and $2.75 billion, for an adjusted operating margin of 24% to 25%.
Microsoft (+0.9%). The CMA, Britain’s antitrust and financial regulator, said today it would examine the possibility of launching an investigation into the multi-billion dollar partnership of Microsoft with the designer of ChatGPT, OpenAI. It would be a question of determining whether the merger resulted in a “takeover”, the UK Competition and Markets Authority said. Microsoft owns 49% of OpenAI, according to sources familiar with the matter cited by Reuters. OpenAI has a non-profit parent company that owns 2%, according to the same sources. This is the second time this year that the CMA has looked into this matter. She had already wondered if the deal between Microsoft and OpenAI had not resulted in the creation of a merger situation. “There have recently been a number of developments in the governance of OpenAI, some of which involve Microsoft,” notes this time the CMA. In light of these developments, the CMA is now issuing an ITC to determine whether the Microsoft/OpenAI partnership, including recent developments, has resulted in a relevant merger situation and, if so, what the potential impact would be on the competition…
Nvidia (+1.9%) sealed a $4.3 billion partnership in AI with Malaysian group YTL Power. Malaysian conglomerate YTL’s utility unit will partner with US processor giant to develop artificial intelligence (AI) infrastructure in the Southeast Asian country in a deal investment of 4.3 billion dollars. The first phase is expected to be operational by mid-2024, YTL Power International said on Friday. The companies will collaborate on building Malaysia’s fastest supercomputers using Nvidia AI chips, with YTL Power International also using Nvidia’s AI cloud computing platform to create a large language model in Malay. The project will be hosted at YTL’s Data Center Park in Kulai, Johor.