(Boursier.com) — The trend is slightly positive on Wall Street on Wednesday, the day after a market correction in the wake of Tesla and D’Apple. The S&P 500 recovered 0.42% to 3,840 pts, the Dow Jones 0.1% to 33,169 pts and the Nasdaq 0.32% to 10,420 pts. On the Nymex, a barrel of WTI crude fell 4.6% to $73.4. An ounce of gold gained 1% to $1,863. The dollar index fell by 0.1% against a basket of currencies. Apple and Tesla remain under scrutiny today, while Salesforce has just announced a downsizing plan.
The US ISM manufacturing index for December came in at 48.4, versus a FactSet consensus of 48.3 and a level of 49 a month earlier. The new orders sub-index stood at 45.2 in December against 47.2 in November.
The US labor market still does not bend despite the economic slowdown. Thus, job openings in the USA for the month of November stood at 10.458 million, against 10 million from the FactSet consensus and 10.512 million a month earlier, in revised reading. The previous October valuation was 10.334 million.
The minutes of the last monetary meeting of the Fed (8 p.m.) will be known in the evening… In the meantime, Wall Street is progressing following somewhat more flexible comments from the boss of the Minneapolis Fed, Neel Kashkari. The latter has just judged that there were more and more signs that inflation had peaked. However, it would still be too early to be completely sure, and Kashkari still recommends raising rates during the next monetary meetings. It is all the same a slightly less hawkish tone for this Fed official, who is posting a target of 5.4% for the peak in rates, but is beginning to half-timidly open the door to a possible subsequent pivot. Kashkari’s comments come from an essay posted online Wednesday. This relative confidence displayed regarding the peak of inflation is rather good news, coming from one of the most “hawkish” leaders of the Fed.
The fed funds rate range is between 4.25 and 4.5%. According to the CME Group’s FedWatch tool, the probability of a further 25 basis point rate hike on February 1, after the next monetary meeting, is 70%, against 30% probability for a gesture of 50 basis points.
Elsewhere in the world on Wednesday, the final Japanese Markit / JMMA manufacturing index for December came out in the contraction zone at 48.9. German import prices fell 4.5% in November compared to the previous month. In France, the consumer price index in European harmonized data for the month of December declined by 0.1% in preliminary data and compared to the previous month, against +0.3% of FactSet consensus. Inflation thus fell to 6.7% over one year in harmonized data, against 7.2% consensus.
The final Markit PMI indicators for European services were also announced, at 51.6 in Spain against 50 consensus, 49.9 in Italy against 49.7 consensus, 49.5 in France against 48.1 expected, and 49, 2 in Germany against 49 consensus. The final composite Markit PMI index for the euro zone thus stands at 49.3, against 48.8 of market consensus and 48.8 also for its preliminary reading.
Values
Salesforce (+3%) announced its intention to reduce its workforce by around 10%, while the American software group says it has hired too many staff. Salesforce has approximately 80,000 employees. The restructuring should be finalized by the end of fiscal year 2024. The group also plans to reduce its workspace, with adjustments expected in fiscal year 2026. Salesforce is therefore reacting to the economic slowdown, under pressure of investors including activist Starboard Value. At the same time, the group envisages, for the quarter started, only its weakest revenue growth since the IPO in 2004. At the top of the organizational chart, the co-CEO Bret Taylor and the CEO of Slack, Stewart Butterfield, recently announced their departures.
“The environment remains challenging and our customers are taking a more measured approach to their buying decisions,” Salesforce chief executive Marc Benioff said in a letter to employees. “While our revenues have accelerated during the pandemic, we hired too many people before this economic downturn we are currently facing, and I take responsibility for that,” the executive added. Salesforce, the largest private sector employer in San Francisco, had nearly tripled its workforce in the past five years.
Tesla (+4%). Dan Ives, Wedbush specialist, considers the Tesla title “far too oversold”, in a note of the day. “Fears of the unknown” caused the action of the electric vehicle manufacturer to fall 65% last year and 12% more yesterday Tuesday, for the first session of the year. Ives, who had previously been critical of Elon Musk’s handling of Twitter and knocked Tesla off his list of ‘best ideas’ in November, is now sounding a bit more optimistic.
Apple (+1%), which has just corrected by 15% over one month and 30% over one year, falling back below the bar of 2,000 billion in market capitalization on Wall Street, would it constitute an opportunity? Warren Buffett’s favorite technology group has worried the markets in recent months, in particular because of the situation in China and a potential slowdown in demand for its flagship product, the iPhone. As for brokers, opinions are divided. Exane BNP Paribas has just revised its recommendation from ‘outperformance’ to ‘neutral’. Other specialists are a little more offensive after the purge. This is the case of Dan Ives, an analyst at Wedbush, who nevertheless maintains his positive recommendation, at ‘outperformance’.
Amazon (-1%) announced yesterday that it had reached an agreement with certain lenders to provide it with an unsecured loan of $8 billion. The term loan will mature in 364 days, with an option to extend for an additional 364 days, and the proceeds will be used for general corporate purposes. “Given the uncertain macroeconomic environment over the past few months, we have used different financing options to support capital expenditures, debt repayments, acquisitions and working capital needs,” a holder said. Amazon’s word to Reuters. Toronto Dominion is the administrative agent for the loan agreement. DBS Bank and Mizuho Bank are among the lenders.
Rivian (stable), the US designer of electric vehicles backed by Amazon, missed its 2022 production target, but the stock is doing quite well on Wall Street so far. Rivian produced 10,020 vehicles in the fourth quarter alone and 24,337 units for the whole of 2022, while the group was considering 25,000 units according to its latest estimates. The group had halved its previous target of 50,000 units by mid-2022. Its plant in Normal, Illinois, also delivered 20,332 vehicles last year. Rivian is suffering like other industry players from supply chain disruptions. The group disappointed in December by canceling its plans for an alliance in vans in Europe with Mercedes-Benz for the time being.
Microsoft (-5%) is working on a version of the Bing search engine that would use AI to answer search queries rather than just displaying a list of links, The Information understands. People with direct knowledge of the plans say Microsoft is working to integrate OpenAI’s ChatGPT chatbot into the Bing search engine with a launch that could take place before the end of March as the company seeks to outsmart Google. Microsoft still stumbles on Wall Street today, while UBS has just downgraded the purchase value to ‘neutral’, judging that Azure, the group’s growth engine, could suffer from the economic slowdown.
Ali Baba (+8%) is climbing on Wall Street, while Ant Group, in which the Chinese e-commerce giant holds a third of the capital, would have been authorized by Chinese regulators to raise funds.