(Boursier.com) — The American stock market is struggling to recover from its session the day before, marked by a correction in the wake of the quarterly You’re here and the latest comments from Jerome Powell. The trend therefore remains negative before market this Friday, with the S&P 500 dropping 0.4%, the Dow Jones 0.3% and the Nasdaq 0.5%. On the Nymex, a barrel of WTI crude rose 1% to $89.2. An ounce of gold gained 0.5% to $1,991. The dollar index gains 0.1% against a basket of currencies.
In the absence of new statistics today across the Atlantic, operators are focusing on the interventions of Fed officials. Patrick Harker and Loretta Mester will speak today. Atlanta Fed President Raphael Bostic said today on CNBC that while inflation remains too high, it is falling as indications of a slowdown in the economy grow. . The official believes that a relaxation of monetary policy could be possible from the end of next year if this scenario is confirmed. “We must get closer to 2% before considering any easing. Inflation is our priority, we must control it,” Bostic added in a television interview. Bostic also indicated that he did not expect a recession, despite the slowdown which is confirmed.
During a speech yesterday at the Economic Club of New York, Jerome Powell, the head of the Fed, indicated that the strength of the American economy and the persistence of tensions on the labor market could well justify further increases rates, despite the already aggressive monetary tightening carried out for more than a year. However, Powell also suggested that a pause was likely at the next meeting, and that high bond yields could do part of the job for the US central bank. The markets’ interpretation was rather negative last night, with Wall Street fearing that rates would remain at a high level for a long time. The yield on 10-year US Treasury bonds reached a 16-year peak, at almost 5%, compared to 5.11% on the 30-year bond. The 2-year T-Bond now displays a yield of 5.13%.
Powell suggested that the central bank could therefore keep its rates stable at its next meeting, which corresponds to market expectations (98% probability of a monetary status quo on November 1 according to FedWatch – i.e. unchanged rates between 5 .25 and 5.5%). But the Fed helmsman also warned that inflation was still too high and that further rate hikes were still possible if the economy remained surprisingly buoyant. “Additional evidence of persistent above-trend growth, or that labor market tensions are no longer easing, could undermine further progress on inflation and could justify further policy tightening monetary”, declared the intractable Powell yesterday Thursday during his speech before the Economic Club of New York.
Powell stressed that given the uncertainties and risks, and the path traveled, the FOMC (Fed’s monetary committee) would proceed with caution. The Fed Chairman also noted that “doing too little could allow above-target inflation to become entrenched and ultimately require monetary policy to address more persistent inflation, to the detriment of employment. “Doing too much could also unnecessarily harm the economy,” Powell said. Powell also said Thursday that the central bank is closely monitoring the recent rise in long-term bond yields. Other Fed officials have already said in recent days that if long-term interest rates remain high, the Fed may have less need to act. “We remain attentive to these developments, as persistent changes in financial conditions may have implications for the direction of monetary policy,” Powell said. Asked whether those higher yields could dampen the Fed’s motivation to raise rates further, Powell said: “It could, that remains to be seen.” He added that as long as bond yields rise for reasons other than expectations of Fed tightening — which he believes is the case — it would amount to a tightening of financial conditions.
Powell noted that short-term measures of core inflation (excluding food and energy) over the past three and six months were now below 3%. But he added that these short-term measures were often volatile. “Inflation is still too high, and a few months of good data is just the beginning of what it will take to build confidence that inflation is falling sustainably toward our goal,” Powell said. Finally, the labor market remains solid according to the Fed leader, but this market is also showing signs of gradual cooling.
Values
Intuitive Surgical fall on Wall Street, after having once again exceeded market estimates in terms of quarterly profits. The American medical robotics giant corrects all the same, while its revenues appear a little short compared to a demanding consensus. The Sunnyvale Californian group posted revenues of $1.74 billion for the closed period, up 12%, compared to a consensus of $1.76 billion. Growth in procedure volume was 19% with the da Vinci surgical robot, compared to last year. Quarterly adjusted earnings per share were $1.46, compared to $1.41 consensus and $1.19 a year earlier. The Company has placed 312 da Vinci surgical systems, compared to 305 in the third quarter of 2022.
CSX, the American railway group, published its accounts for the third fiscal quarter of 2023 last night. The group generated an operating profit of 1.3 billion dollars compared to 1.58 billion a year before. Net profit represented $846 million, or 42 cents per share, compared to $1.11 billion a year earlier. Revenues declined by 8% to $3.57 billion in the quarter ended at the end of September, which was slightly higher than the market consensus. Earnings per share, however, are one cent lower than the market consensus. Low freight volumes and inflationary pressures weighed on the accounts.
Schlumberger (SLB) announced revenues of $8.31 billion for its third quarter ended September, an increase of 3% compared to the previous quarter and 11% year-on-year. GAAP earnings per share of 78 cents increased 8% from the prior quarter and 24% from a year ago. The consensus was 77 cents in adjusted earnings per share for $8.33 billion in revenue. The group’s share of net profit was $1.12 billion, an increase of 24% year-on-year. Adjusted Ebitda reached $2.08 billion, up 18% compared to the previous year. Cash flow from operations was $1.68 billion and free cash flow was $1.04 billion.
American Express unveiled this Friday quarterly accounts higher than expectations, helped by the resilience of spending by the wealthiest customers. AmEx therefore resisted inflation well with its high-end clientele, even posting its sixth consecutive quarter of record revenues, with turnover increasing by 13% to $15.4 billion – in line with expectations Steps. The group announced a profit of $2.45 billion, or $3.30 per share, compared to $1.88 billion a year earlier. The consensus was at $2.94. AmEx increased its provisions for credit losses to $1.23 billion, 58% more than last year. Management today cites robust travel and entertainment spending, and dynamic restaurant spending.
Interpublic, the American advertising group, revealed adjusted revenues of $2.31 billion for its third quarter, an increase of 0.6% year-on-year but an organic decrease of 0.4%. Consolidated net income was $246 million. Adjusted Ebita before restructuring charges reached $397 million. The adjusted EBITA margin before restructuring charges was 17.2% of adjusted revenues. Diluted earnings per share were 63 cents, while adjusted earnings per share were 70 cents. The market consensus was 73 cents in adjusted earnings per share on $2.38 billion in revenue.
Regions Financial, the American regional bank, published for its third quarter ended at the end of September a net profit of 465 million dollars or 49 cents per share, up 15%, for relatively stable revenues at 1.9 billion dollars. The consensus was for 58 cents in adjusted EPS and $1.89 billion in revenue. “We are pleased with our third quarter core performance,” said John Turner, CEO of Regions Financial Corp.
Huntington Bancshares, the American banking establishment, recorded an 8% decline in its profit in the third quarter, while income from interest on loans fell. Huntington earned 35 cents per stock in the quarter ended September 30, down 4 cents year-over-year. Interest income growth was notably pressured by rising deposit costs as customers withdrew money to seek better returns. Huntington reported that its third-quarter net interest income fell 3% year-over-year. Total deposits at the end of the quarter were $148.1 billion, up from $146 billion a year earlier.
Comerica posted a decline in quarterly profit, but exceeded Wall Street expectations. The establishment warns that its net interest income is expected to decline in the current quarter, with banks having to pay more to retain depositors. A decline in the NII of 5-6% is therefore envisaged for the fourth quarter. The group posted earnings per share of $1.84 for the quarter ended at the end of September, compared to around $1.7 consensus.
Hewlett Packard Enterprise corrected on Wall Street this Friday, while the IT services provider delivered guidance considered disappointing on profit and cash flow. For the 2024 financial year, the group expects adjusted earnings per share ranging from $1.82 to $2.02. Free cash flow is expected between $1.9 and $2.1 billion over the period.
Apple. Chinese Vice Prime Minister Ding Duexiang has urged Apple boss Tim Cook to involve the Cupertino group in the development of the Chinese digital economy. These comments were made during a surprise visit by Cook to Beijing. This visit comes as the Apple group has just launched its iPhone 15, which faces tough competition from the Chinese group Huawei. “China is willing to provide more opportunities for foreign-invested companies, including Apple, to develop in the country,” said Ding Duexiang, according to comments reported by Chinese state radio and relayed in particular by Reuters.