(Boursier.com) – Wall Street is trying to pull itself together this Friday, after a plunge in the Nasdaq last night with netflix And You’re here. The trend is therefore marginally positive today, with the Nasdaq recovering 0.1% to 14,076 pts, the Dow Jones rising 0.16% to 35,281 pts and the S&P 500 gaining 0.23% to 4,545 pts. The “buy the dip” phenomenon has been repeated regularly in recent months on the American stock market, but valuations remain quite tight and demanding for American megacaps. Tesla and Netflix have shown that even higher-than-expected profits may no longer be enough on files that have rebounded too copiously. Next week, Microsoft And Alphabet announce Tuesday evening, while Meta post Wednesday…
In the meantime, the thesis of a soft economic landing defended by a good number of strategists took a little lead in the wing this week, since apart from employment statistics, most of the US economic indicators (consumption, production, etc.) show a clear slowdown or contraction… Note that there will be no new economic ‘stats’ in the United States this Friday, which is perhaps not a bad thing.
Apart from the financial results of the big American names in “tech”, the other major meeting next week obviously concerns central banks. The Fed is holding its monetary policy meeting on July 25 and 26. The FedWatch tool now gives a probability close to 100% of a new rate hike of a quarter point, which would bring the fed funds rate between 5.25 and 5.5%. This could well be the last hike in the Fed’s monetary tightening cycle. Easing would then be possible in the first half of 2024, depending on economic and financial developments.
On the Nymex this Friday, a barrel of WTI crude gained 1.1% to $76.4. An ounce of gold lost 0.4% to $1,963. The dollar index gains 0.2% against a basket of currencies.
Values
American Express (-4%) beat the second-quarter earnings consensus as its affluent clientele continued to spend despite inflation and rising rates. AmEx therefore benefited from record customer spending. Total network volumes increased 8% to $426.6 billion in the second quarter ended June 30, with double-digit growth in spending by U.S. consumers and international cardholders. The credit card company posted earnings of $2.89 per share for the quarter, against a consensus of around $2.8. AmEx’s total provisions for credit losses were $1.2 billion in the second quarter, up from $410 million a year earlier. Total revenue, net of interest expense, rose 12% to $15.05 billion, driven by higher lending volumes and increased cardholder spending. However, they are very slightly below expectations. The quarterly consolidated net profit was 2.17 billion dollars, an increase of 11%.
“We achieved our fifth consecutive quarter of record revenue and achieved record earnings per share this quarter, each growing 12% year over year, demonstrating the continued strength of our differentiated business model,” said Stephen J. Squeri, Chairman and Chief Executive Officer. Based on results to date, AmEx reaffirms its full-year 2023 guidance provided in January of 15-17% revenue growth and $11-11.40 EPS…
Schlumberger lost 3% on Wall Street, while the oil services giant has just published its accounts for the second fiscal quarter. Revenue of $8.10 billion increased 5% sequentially and 20% year-on-year, compared to consensus of $8.2 billion. GAAP EPS was $0.72. It was up 11% sequentially and 7% year-on-year. Adjusted EPS also came out at $0.72, versus $0.71 consensus. It was up 14% sequentially and 44% year-on-year. Net income attributable to SLB was $1.03 billion and increased 11% sequentially and 8% year-on-year. Adjusted EBITDA was $1.96 billion. It increased 10% sequentially and 28% year-on-year.
interpublic (-11%), the American communication group, published last night disappointing profits and revenues for the second quarter, with an organic decrease of 1.7%. Quarterly revenue totaled $2.67 billion, or $2.33 billion on an adjusted basis – versus consensus of $2.39 billion. Consolidated net profit was $265.5 million. Adjusted EBITA before restructuring charges was $330.2 million. Adjusted EBITA margin before restructuring charges was 14.2% on revenue before billable expenses. Diluted earnings per share were $0.68 as reported and $0.74 on an adjusted basis. Diluted EPS as reported and adjusted includes a tax benefit of $0.17 per share related to the conclusion of the prior period’s routine federal tax audits. Thus, adjusted EPS excluding this element represented 57 cents, against 60 cents consensus.
Philippe Krakowsky, CEO of IPG, adds: “Given our first six months, we are revising our full year organic growth expectation to between 1% and 2%, while remaining fully committed to our existing margin target for the year of 16.7%, which represents margin expansion over 2022. These are testament to the strength of our offerings, underpinned by our core data and technology infrastructure, and will provide strong tailwinds as we enter the second half of this year and even more into 2024.”
AutoNation (-7%), American automotive retailer which supplies new and used vehicles and related services, has just published better than expected quarterly accounts. The Fort Lauderdale, Fla., group posted net income of $273 million, or $6.02 per share, for the quarter, compared with $376 million, or $6.48 per share, a year earlier. On an adjusted basis, the group generated EPS of $6.29, against $5.91 of FactSet consensus. Revenue hit $6.9 billion, versus consensus of $6.8 billion. The company benefited from demand for new vehicles and aftermarket services, which offset the impact of lower used vehicle sales.
Digital World Acquisition Corporation jumped more than 60% on Wall Street! The Special Purpose Acquisition Company (SPAC) set to merge with former US President Donald Trump’s media company has indeed settled regulatory charges that it made “misrepresentations” to investors, thus boosting the former “meme stock” on Wall Street. The Securities and Exchange Commission, the watchdog of the US stock market, said yesterday that Digital World Acquisition Corporation, which violated anti-fraud provisions of federal securities laws, has agreed to an order and payment of $18 million if it closes the merger. The operators therefore hope that the merger, announced in October 2021, can continue after payment of the fine.
Capital One Financial (+1%), the Bank of Virginia, also an issuer of credit cards, on which the firm Berkshire Hathaway of Warren Buffett recently initiated a position, published yesterday evening its financial results for the second quarter. For this period, Capital One posted adjusted earnings per share of $3.52, clearly exceeding the market consensus – close to $3.2. Quarterly revenues exceeded $9 billion, but came in slightly below market expectations (consensus $9.1 billion). They compare to revenues of 8.2 billion made over the corresponding period last year. The firm benefited over the period from the rise in interest rates and its impact on loan income. As for deposits, the bank held up very well and reported growth of 12% over the period to almost 344 billion dollars.
Intuitive Surgical (-2%) once again exceeded market estimates in terms of quarterly revenue and profit. The American giant of medical robotics nevertheless gives in to profit taking on the stock market. The Californian group Sunnyvale posted revenues of 1.76 billion dollars over the period closed, up 15%, against 1.74 billion consensus. The growth in the volume of procedures was 22% with the da Vinci surgical robot, compared to last year. Quarterly adjusted earnings per share were $1.42, versus $1.32 consensus.
Comerica (-3%), the average American bank, announced for its second quarter a profit higher than the Wall Street consensus, the rise in rates having boosted the net interest income (NII) of the establishment to 621 million dollars, against 561 million a year before. Quarterly earnings per share were $2.01, versus $1.86 consensus. However, the NII is now only expected at +1 to 2% over the year, against +6 to +7% previously. Average deposits at the end of the quarter were 64.3 billion, down 5% sequentially.
Huntington Bancshares (-2%) beat the Wall Street consensus in terms of profits with net interest income and trade credit demand. NII (net interest income) rose 7% to $1.35 billion. The NII is now expected to rise 3-5% over 2023, from 6-9% previously. Earnings per share were 35 cents, versus consensus 34 cents. Deposits finally totaled 148 billion dollars, up 2%.
Regions Financial (-3%) unveiled ‘online’ results for the second quarter. Earnings per share were 59 cents, in line with consensus. Average deposits, however, declined 3% sequentially and 10% year-on-year. The bank provisioned $118 million for credit losses in the quarter to the end of June.
CSX (-4%), the American railway giant, missed the revenue consensus for the quarter ended on Wall Street, with the decline in intermodal volumes. Revenue fell 3% to $3.7 billion, versus market consensus of $3.74 billion. Net profit was 996 million dollars or 49 cents per share, against 1.18 billion dollars and 54 cents per share a year earlier. Earnings per share came out in line with the consensus.