Wall Street: strong technical rebound of the Nasdaq


(Boursier.com) — After the purge of the last few weeks, Wall Street finally seems to be in better shape this Friday, offering itself a notable technical rebound. The S&P 500 took more than 2% to 4,009 pts, while the Dow Jones rose 1.32% to 32,148 pts. The Nasdaq offers a gain of 3.11% to 11,724 pts. The barrel of WTI crude rose another 3.4% to $109.7. An ounce of gold lost 0.7% to $1,812. The dollar index lost 0.1% against a basket of benchmark currencies. Bitcoin jumped to $30,000, gaining 7% in 24 hours but dropping another 15% over a week.

Operators are now engaged in a daring ‘hunt for bargains’, favoring the most massacred stocks on the Nasdaq. However, the narrative has not really evolved. The Fed will have to tighten its monetary policy aggressively in order to fight effectively against inflation that is still extremely high, at the risk of further accentuating an already tangible economic slowdown.

On the economic front across the Atlantic this Friday the 13th, the US import price index for the month of April 2022 was stable compared to the previous month, against +0.5% FactSet consensus. The export price index rose by 0.6% compared to March, which comes out close to consensus expectations. Over one year, import prices are up 12% and export prices up 18%.

The preliminary index of U.S. consumer sentiment measured by the University of Michigan for May 2022 came in at 59.1, far from the consensus of around 64, after a final reading of 65.2 in April.

Markets are seeing some semblance of encouragement from Fed Chairman Jerome Powell, reiterating his support for rate hikes of 50 basis points – still better than 75. Powell acknowledged that achieving a landing in softness depended on factors beyond the Fed’s control and that returning inflation to the 2% target would cause some pain. However, he stressed that controlling inflation was the priority.

The comments were echoed by other Fed officials on Thursday. San Francisco Fed boss Mary Daly (non-voting in the FOMC) backed rate hikes of 50 basis points and said financial conditions needed to tighten further to rebalance supply and demand. St. Louis Fed’s James Bullard (voting) told Yahoo Finance that 50 basis point rate hikes in at least two upcoming meetings is a good benchmark. He said he was sensitive to financial market disruptions, but also downplayed the risk of a recession given the strength of the labor market. He estimated that inflation was “more persistent” than expected.

Concerns persist regarding the economic slowdown, the prolonged period of rising inflation and the impact of tighter financial conditions remaining headwinds. The ongoing conflict in Ukraine and the Covid lockdowns in China also reinforce the sentiment that supply chain disruptions will take time to abate.

The latest reports on the Ukrainian conflict highlight limited Russian progress in the east of the country. Moscow has declared its intention to strengthen defenses along the Finnish border if it goes ahead with its plan to join NATO. Some EU countries are pushing to delay the ban on Russian oil so they can push for other sanctions instead. Operators also fear reprisals from Russia. Meanwhile, attention is also on the jump in daily covid infections in Shanghai, which casts doubt on the timing of easing restrictions. The PBoC will meet on Monday, but opinions are divided on whether China’s central bank will ease policy.

Values

Twitter fell 9% to $41 on Wall Street, while the richest man on the planet, Elon Musk, who promised to acquire the social media network for $54.2 per title, $44 billion in total, has just suspended its offer! “The Twitter agreement is temporarily suspended pending details supporting the calculation that spam / fake accounts actually represent less than 5% of users”, has just tweeted the businessman, boss of You’re here and SpaceX, with a link to a Reuters article relating to these “false” estimates, article dated May 2. This article from the news agency referred to Twitter’s estimate that fake accounts and spam accounted for less than 5% of total monetizable daily active users in the first quarter. Over the period, the social network had 229 million users to whom advertisements were offered.

Musk, who had proposed in April the acquisition of the platform for 44 billion dollars, had also estimated that one of the priorities was to remove the ‘spam bots’ from the network. Musk revealed on April 4 that he acquired more than 9% of Twitter shares, a week later than regulations allow and using a filing typically reserved for passive investors. He then corrected his statement, and has since embarked on a more concrete purchase offer.

At the end of April, the billionaire said he had secured the financing of his possible takeover bid on Twitter. Since then, Musk was still negotiating with potential investors. Oracle founder Larry Ellison was also to take part in the deal, as was cryptocurrency company Binance. Saudi Arabia was to retain a stake. Musk had also sold several billion dollars worth of Tesla securities to secure his share of the financing.

Recall that Elon Musk should pay 1 billion dollars to Twitter if he does not finally adhere to the agreement previously sealed between the two parties. However, note that in another tweet just now, Musk adds that he is “still committed to the acquisition”. The market does not believe it for a moment, since the share price is almost 30% lower than its offer price, according to the pre-session trend.

Motorola Solutions (+6%), American firm born from a split from Motorola ten years ago, and active in video and telecom equipment, as well as software, systems and services, published yesterday evening for its first fiscal quarter a profit adjusted per share of $1.70, compared to a consensus of $1.58 and a level of $1.87 a year earlier. The group’s revenues were $1.89 billion in the quarter ended in March, compared to $1.77 billion a year earlier. The group therefore exceeded the revenue consensus by 3% over the closed period.

robinhood. The online brokerage app climbs 22% on Wall Street. The surge is linked to Sam Bankman-Fried, managing director of the crypto-asset trading platform FTX, which revealed after the close of trading yesterday that it had acquired a 7.6% stake in the capital of Robinhood. According to a document filed with the SEC, the policeman of the American Stock Exchange, the company Emergent Fidelity Technologies, of which Sam Bankman-Fried is the boss and the main shareholder, acquired this 7.6% stake for an amount of 648 million of dollars. Founded in May 2019, and based in Nassau, Bahamas, FTX does not currently have a commercial presence in the United States, but is one of the world’s largest cryptocurrency trading platforms, rivaling Coinbase and of Binance.

Its boss and co-founder Sam Bankman-Fried will have benefited from the fall of the Robinhood title, which has been evolving in recent days at its historic lows. In the stock market document, Emergent Fidelity Technologies indicated that it had acquired these securities believing that they “represent an attractive investment” and specified that it intended to manage this participation as a financial investment, and “not to have the intent at this stage to act to change or influence control” of Robinhood. The acquirer, however, reserves the right to “engage in discussions with management from time to time” and added that he could in the future buy other securities, as well as study “options to increase the value for shareholders, through, among other things, alternative strategies or operational or governance initiatives” of the online broker.

Among the other rating giants on Wall Street, Apple rises 3%, after being dethroned by Saudi Aramco yesterday as the world’s largest market capitalization. You’re here recovers 6%, seeing Musk’s less interest in Twitter. Amazon gain 4%, Microsoft 2% and Alphabet 3%.



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