(Boursier.com) — Wall Street hesitates before the market this Friday, the S&P 500 gaining 0.1% as it approaches its historic peaks, but the Dow Jones consolidating by 0.2%. The Nasdaq gained 0.2% for its part. The American indices had fallen on Wednesday without any fundamental reason, before rebounding just as quickly yesterday, Thursday. The records of the Dow Jones and the Nasdaq 100, however, encourage operators to be a little more cautious. This Friday, Nike weighs somewhat on the markets following lackluster forecasts. Investors are also aware of (another) reassuring indicator regarding inflation.
On the Nymex, a barrel of WTI crude gained 1.1% to $74.7. An ounce of gold rose 1.4% to $2,080. The dollar index fell by 0.2% against a basket of currencies. The yield on 2-year Treasury bonds stands at 4.34%, compared to 3.87% on the 10-year bond and 4.01% on the 30-year bond.
According to today’s report this Friday, new orders for durable goods in the United States for the month of November increased by 5.4% compared to the previous month, significantly more than the consensus which stood at +2, 2%, after a decline of 5.1% in revised reading for the month of October. Excluding transport, durable goods orders for the month of November improved by 0.5%, compared to +0.1% consensus and -0.3% a month before.
The personal income of American households for the month of November 2023 increased by 0.4% compared to the previous month, as expected, after an increase of 0.3% in revised data for October. Personal consumption expenditure for the month of November increased by 0.2% compared to the previous month, compared to +0.3% consensus and +0.1% for the revised October reading. Finally, the ‘core PCE’ price index monitored by the Fed increased by a modest 0.1% compared to the previous month, against +0.2% consensus. The index climbs 3.2% over one year against +3.4% consensus, which therefore represents further good news on the inflation front across the Atlantic.
November new home sales in the United States (FactSet consensus 688,000) and the final index of American consumer sentiment from the University of Michigan for December (consensus 69.6) are still expected within an hour.
US GDP for the third quarter of 2023 was revised down yesterday for its final reading. It still appears to be growing strongly at a rate of 4.9%, compared to 5.2% consensus and 5.2% for the previous assessment. Personal consumption expenditure increased at a rate of 3.1% in the third quarter, compared to +3.6% consensus. The price index rose by 3.3%, in line with the consensus.
Patrick Harker, the head of the Philadelphia Fed, indicated in a radio interview this week that the US central bank should start cutting rates, but not immediately. According to him, it is therefore important that the Fed reduces its rates, but it would not have to do it so quickly and right now. Austan Goolsbee, president of the Chicago Fed, explained earlier this week that the US central bank would not be influenced by the markets. According to him, it is inflation which will determine the future monetary decisions of the Fed. The monetary institution may reconsider its restrictive policy if inflation continues to approach the 2% objective… Raphael Bostic, who heads the Atlanta Fed, also spoke this week. According to him, it is likely that inflation will continue its gradual decline over the coming months, but slowly enough not to justify lifting the restrictive policy for the time being. Bostic therefore remains very conservative and is only considering two rate cuts next year, during the second half of the year. Thomas Barkin, head of the Richmond Fed, estimated that the Fed would reduce its rates if inflation continued to fall. However, he also cautioned that he considered inflation to be more stubborn than the average person, and therefore could not predict where the data would head.
Despite the numerous interventions by Fed officials this week, there is not much change in market expectations regarding rates, with the FedWatch tool giving a probability of around 14% now of a rate cut on January 31, 2024, compared to 84% on March 20. According to the same tool, the rates could be in a range of 3.75 to 4% (probability of almost 38%) or between 3.50 and 3.75% (probability of 35%) at the end of the year next.
Values
Nike unscrews before market on Wall Street this Friday, while the giant of sports shoes and accessories disappointed with its financial publication. The group indeed lowered its revenue guidance last night and presented a plan to reduce expenses by $2 billion over three years, favoring profitability rather than sales. For its second fiscal quarter just ended, the group posted revenues of 13.39 billion dollars compared to 13.32 billion a year before. These quarterly revenues are slightly lower than expected. Wholesale revenue declined 2% to 7.1 billion. Sales in Greater China rose 4%, but that represented a slowdown from the previous quarter’s 5% rise. Direct sales revenues were 5.7 billion, an increase of 6%. Gross margin increased by 170 basis points to 44.6%. Diluted earnings per share rose 21% to $1.03.
“Our second quarter results demonstrated how we are gaining momentum in our key areas of innovation and growth,” said John Donahoe, CEO. “This quarter demonstrated strong execution from our team as we focus on our winning formula of innovative product, distinctive storytelling and differentiated market experiences.” Matthew Friend, executive vice president and chief financial officer, said: “The financial performance in the second quarter was a turning point in creating more profitable growth. As we see a weaker revenue outlook in the second half, we remain focused on strong gross margin execution and disciplined cost management.” The Company is identifying opportunities to realize up to $2 billion in cumulative savings over the next three years. Areas of potential savings include simplifying product assortment, increasing automation and use of technology, streamlining the organization, and leveraging scale to increase efficiency.
Nike certainly clearly exceeded the profit consensus for the closed quarter, but very cautious macroeconomic comments from management weighed down the value, the group reporting weaker demand outside of key holiday events, digital traffic also more moderate (… ). In a more difficult economic context, Nike reduced its revenue growth forecast for the financial year to +1%. The group expects the third quarter to be slightly down due to difficult comparisons. More positive comments focused on the savings program, planned acceleration of the innovation pipeline, margin expansion and inventory control.
Berkshire HathawayWarren Buffett’s investment firm, acquired 5.2 million additional shares of the oil producer Western Petroleum for $312 million between December 19 and 21, bringing its stake to 27.7% according to filings with the Securities & Exchange Commission. Berkshire had previously purchased nearly 10.5 million additional Occidental shares in a week earlier this month, bringing its stake to 27% of Occidental’s capital. Berkshire’s previous purchases of Occidental shares dated back to late October.
U.S. Steel lost some ground before market on Wall Street, while the Biden administration indicated that careful examination was necessary following the offer of the Japanese group Nippon Steel for the American steel giant. The White House indeed evokes the central role of the American group in the production of steel in the United States, an essential element for national security. Remember that Nippon Steel announced a few days ago an offer for the American steelmaker worth $14.9 billion, including debt. This announcement came a few months after the American went on sale. Nippon’s offer is priced at $55 per security, which represents a 142% premium to prices prior to the announcement of a strategic review process on August 11. Nippon Steel, the world’s fourth largest player in the steel industry, is therefore betting big on the United States, in order to compensate for the drop in demand in Japan. The Japanese have obtained financial commitments for the agreement and thus intend to reach 100 million tonnes of global crude steel capacity.
Electronic Arts And Take-Two Interactive are losing ground before the stock market. Chinese giant Tencent earlier collapsed 12.4%, as China surprised financial markets with a new set of rules targeting video gaming and excessive spending related to the hobby. Online games will now be prohibited from granting rewards to players logging in every day or spending for the first time – or multiple times in a row – in a game, incentive mechanisms common in the industry.
You’re here bought a plot of land in Shanghai to set up a factory where the group would build its Megapack mega-batteries, according to local news agency Xinhua. The American automaker would produce 10,000 massive batteries per year in the factory located in the Lingang free trade zone in Shanghai, once construction of the factory is completed. A land acquisition agreement was signed Friday morning, Xinhua said. “After securing the site, Tesla will officially launch the project with substantial steps taken to get production up and running,” said Gao Shen, an independent analyst in Shanghai cited by the South China Morning Post.