(Boursier.com) – The American rating is displayed in scattered order this Friday, after its incredible rally the day before (+3.7% on the DJIA and +7.35% on the Nasdaq). The S&P 500 advanced 0.4% to 3,973 pts, but the Dow Jones lost 0.41% to 33,589 pts. The Nasdaq gains another 1.19% to 11,246 pts with Amazon. Although US inflation slowed down in October, everything still remains to be done for the Fed, which must bring this inflation back towards the 2% target, and must therefore continue, even a little more slowly, its monetary tightening. On the Nymex, a barrel of WTI crude took 4% to $89.9 today. An ounce of gold gained 0.7% to $1,765. The dollar index lost another 1.2% against a basket of benchmark currencies.
The preliminary U.S. consumer sentiment index measured by the University of Michigan for the month of November 2022 came in at 54.7, down from a FactSet consensus of 59.5 and a level of 59.9 on the prior month. . The consumer judgment component of the current situation corrected to 57.8 from 65.6, while that of expectations fell to 52.7 from 56.2, according to the report.
This is the only statistic of the day, the day after an excellent surprise on US inflation which slowed to 7.7% over one year in October, raising hopes in the future for less brutal rate hikes of the Fed after a painful series of four increases of 75 basis points on the ‘fed funds’.
After yesterday’s report on the US CPI, reflecting a slowdown in US inflation, back to the lowest since January, several Fed officials have toned down their rhetoric. Philadelphia Fed chief Patrick Harker (non-voting) said he was in favor of a pause once the fed funds rate reached around 4.5%. Dallas Fed leader Lorie Logan (non-voting) indicated that it may soon be appropriate to slow the pace of increases, although there is still a long way to go to reduce inflation. San Francisco Fed boss Mary Daly (non-voting) also said it was now appropriate to consider slowing the pace of rate increases, although the pause was not yet a talking point. Voting member Loretta Mester of the Cleveland Fed, however, said the Fed should go ahead with rate hikes and that the biggest risk still would be to tighten too little.
Some Wall Street economists, agreeing with Mester’s view, report that Fed policy is unlikely to change just yet. Citi economists wrote that the ‘softer’ reading of inflation did not significantly affect their view of inflation, especially that of the services sector. They continue to expect a maximum federal funds rate of 5.25-5.5%. Jefferies economists meanwhile recalled repeated Fed comments that the US central bank would like to see a series of ‘softer’ inflation readings.
The US consumer price index for October 2022 was up 0.4% compared to the previous month, against a FactSet consensus of 0.6%. Excluding food and energy, the CPI rose by 0.3% compared to the previous month, against 0.5% market consensus. Over one year, the consumer price index rose by 7.7%, against 7.9% consensus and 8.2% a month earlier. Excluding food and energy, the US consumer price index rose 6.3% over one year, against 6.5% consensus and 6.6% a month earlier.
According to the CME Group’s FedWatch tool, the probability of a rate hike of 50 basis points on December 14, at the end of the next monetary meeting, would now be more than 80%, against less than 20% for the probability of an oversized new move by 75 basis points. Before the publication of the consumer price index, these two probabilities were roughly equivalent. The markets are therefore hoping that the American central bankers will moderate their enthusiasm and slow down the hitherto frantic pace of rate hikes. The Fed has in fact just raised its rates four times by 75 basis points, which poses the risk of a deep recession.
In the news of companies listed on Wall Street, Toast Where Doximity published last night, while Meridian Bioscience Where Shaw Communications announce this Friday. No decisive publication for the markets therefore, at the end of this season of American quarterly results marked by contrasting performances, in particular among listed technology stocks.
Values
Polestar (+19%), the Swedish car manufacturer listed on Wall Street, present in the electric segment, announced its results for the nine months ending at the end of September 2022. Revenues totaled $ 435 million in the quarter ended against 213 million a year earlier. The operating loss was 196 million, compared to 293 million for the corresponding period of 2021. The net result is positive at 299 million dollars compared to a loss of 302 million a year earlier, but it benefits from a non-recurring accounting profit . Over nine months, revenues amounted to 1.48 billion dollars, against 747 million a year earlier. The net loss is reduced to 203 million, against 670 million for the comparable period last year. The group expects solid sales in the fourth quarter. He plans for the year a turnover of 2.4 billion, with 50,000 units sold. The level of cash and cash equivalents at the end of the period was 988 million dollars.
Toast (+6%), the restaurant management software provider in the cloud, climbs on Wall Street, while the group has just raised its annual revenue forecasts. For the third quarter, the group posted a loss of 98 million dollars or 19 cents per share, compared to a deficit of 254 million a year before. The loss of adjusted Ebitda is less heavy than expected at 19 million, against 33 million from the FactSet consensus. Revenues increased to 752 million, compared to 486 million a year earlier and 720 million consensus. The group forecasts, for the fourth quarter, revenues of 730 to 760 million, for an adjusted EBITDA loss of 20 to 30 million.
Intel (-1%) fell on Wall Street. JP Morgan has just downgraded the value of the American microprocessor giant from ‘overweight’ to ‘underweight’. The broker is particularly concerned about increased competition.
Amazon (+4%) is still regaining ground on the stock market. According to the Wall Street Journal, the American e-commerce giant should significantly reduce its costs, particularly targeting the division housing the voice assistant Alexa. The group would have initiated a review in this direction, targeting unprofitable units. Andy Jassy, the chief executive of Amazon, would lead this reflection, according to people familiar with the matter quoted by the WSJ. Amazon has reportedly already told its employees in unprofitable divisions that they can look for work elsewhere in the group. Alexa’s unit has over 10,000 employees and requires significant capital investment. Internal documents cited by the newspaper show annual operational losses of more than $5 billion on the unit in recent years.
Las Vegas Sands (+5%) or Wynn Resorts (+8%) are among the American casino operators likely to benefit from China’s easing of restrictions regarding Covid-19. This could support stock market values on Wall Street.