By amk, 25/02/2022
Wall Street very hesitant, after a new burst of quarterly
(Boursier.com) — American Lacote is expected to be in the red before market trading on Tuesday. The DJIA lost 0.8% and the S&P 500 1.4%. The Nasdaq returns more than 2%. The barrel of WTI crude advances by 0.5% towards $84. The ounce of gold gleans 0.1% to $1,843. The dollar index gained 0.3% against a basket of currencies.
On the economic front on Tuesday on Wall Street, the S&P Case-Shiller home price index for November exceeded expectations. The adjusted 20-City index increased by 1.2% compared to the previous month against 1% consensus and 1% a month before. The FHFA house price index, which has also just been published, rose 1.1% compared to the previous month against 1% consensus.
The US consumer confidence index for the month of January 2022, as measured by the Conference Board, will be revealed at 4 p.m. (consensus 112). The Richmond Fed's manufacturing index for January will finally be announced at 4 p.m. (consensus 14).
Yesterday evening, the American rating miraculously finished in the green after a particularly hectic session. The DJIA took 0.29% and the Nasdaq 0.63%, while the US indices had nevertheless opened very sharply lower.
Geopolitical concerns weigh in any case, with the Russia-Ukraine file. NATO has placed its forces on alert and decided to send reinforcements to Eastern Europe, in the midst of an open crisis between Russia and the Western powers who fear a Russian operation in Ukraine. The United States and the United Kingdom have announced the evacuation from Ukraine of part of their diplomatic personnel and their families, in the face of the Russian threat deemed to be growing. Tensions have escalated in recent months, with Russia deploying around 100,000 troops to Ukraine's borders, raising fears of a Russian offensive. Moscow still denies, for its part, any bellicose intention. The West is finally threatening Russia with heavy economic sanctions in the event of an invasion of Ukraine.
On the health front, the peak of the Omicron wave seems to be confirmed in the United States and in several other regions of the world. In the USA, the number of cases is clearly decreasing in the previously most affected areas.
The week is also marked by the monetary meeting of the Fed, which is held this Tuesday and tomorrow Wednesday. The central bank's monetary statement and Powell's press conference are due tomorrow evening at 8 and 8:30 p.m. Traders will be very attentive and responsive to comments from the central bank and Jerome Powell regarding inflation and the pace of monetary tightening that should follow the accelerated tapering currently underway. The question of reducing the Fed's balance sheet will also be crucial.
Discussions continue regarding the pace of potential tightening in 2022, with expectations of four possible quarter-point rate hikes during the year. The Wall Street Journal raises the possibility of a more aggressive response if officials believe inflation will stay higher for longer. Goldman Sachs also raised the risk of more aggressive tightening, Bloomberg said. Its current baseline assumes rate hikes at meetings in March, June, September and December, but the investment bank notes upside risks amid concerns over prolonged supply chain disruptions , strong wage and rent growth and rising short-term inflation expectations. Analysts flagged the possibility of a Fed rate hike at every currency meeting, should long-term inflation expectations continue to rise or if inflation surprises adversely again.
The WSJ also noted that, unlike previous tightening cycles, the Fed could limit forward guidance on rates given greater uncertainties in the labor market, wages and inflation, leaving markets vulnerable to the current volatility.
This week's FOMC meeting should set the stage for a first rate hike in March. The Fed statement is expected to highlight progress in the labor market towards full employment, at a time when inflation is already above 2%. UBS draws the parallel with the October 2015 statement. The FOMC meeting then preceded the initial December 2015 hike. The statement explicitly mentioned "the next meeting" for a first rate hike of the cycle. The statement expected tomorrow should also highlight the end of asset purchases in March. Another debate is whether the Fed will also release a separate document containing details of the balance sheet reduction, although the consensus seems to be that it will be revealed at one of the next two meetings. Some further believe that Powell may push back on calls for a 50 basis point rate hike in March a bit, reiterating the Fed's preference for a measured approach. The leader of the Fed is in any case pushed for "quantitative tightening". He could also face questions about a possible policy error, in light of recent market weakness.
In business news, IBM took comfort last night with its latest accounts, showing a turnaround with cloud growth. The group thus exceeded expectations in its fourth quarter.
This Tuesday, 3M , Archer-Daniels , American Express , Lockheed Martin , General Electric , Raytheon , Verizon , Microsoft , Xerox , Paccar , Texas Instruments , Capital One Financial and Johnson & Johnson , notably publish their latest financial results.
IBM released Monday evening after the close of Wall Street its first quarterly results since the "spinoff" of its historic branch of digital services, Kyndryl , IPO last November. The new "Big Blue", now refocused on non-IBM technologies, particularly in the cloud, published accounts above expectations in the 4th quarter of 2021.
The digital giant's quarterly net profit thus reached $2.33 billion ($2.60 per share) against $1.36 billion ($1.52 per share) a year earlier. In adjusted data, EPS reached $3.35, slightly above consensus FactSet expectations ($3.30). Revenues climbed to $16.7 billion from $15.68 billion a year earlier, again above the consensus, which had forecast sales of $15.96 billion.
Nvidia is preparing to abandon the acquisition of Britain's Arm, the Bloomberg agency understands. Thus, the American giant of graphics processors, slowed down in its tracks by the competition authorities, could throw in the towel. Bloomberg specifies that the company indicated to its partners that it did not expect to be able to finalize the takeover. For its part, the Japanese SoftBank, current owner of Arm, would seek to IPO the group. Nvidia was aiming to buy Arm for an amount close to 40 billion dollars, but the regulators have since put a spoke in the wheels.
Johnson & Johnson , the American medical and pharmaceutical colossus, said on Tuesday it expects revenues ranging from 3 billion to 3.5 billion dollars for its Covid-19 vaccine this year, against 2.39 billion dollars generated in 2021. Last year, quality problems at the Baltimore site forced the group to get rid of millions of doses of its vaccine. Despite these few production problems and uneven demand, J&J manages to make several billion dollars from its vaccine.
For the fourth fiscal quarter, the group's total revenues were $24.8 billion, up 10.4% year-on-year, with organic growth of 11.6% (12.3% on a year-on-year basis). adjusted). Over the year, sales were 93.8 billion dollars, an increase of 13.6%. In the quarter ended alone, consolidated earnings per share were $1.77, almost tripling year-on-year, while adjusted earnings per share represented $2.13, up 14.5%. The consensus was $2.12 in adjusted EPS and $25.29 billion in revenue.
General Electric , the Boston industrial conglomerate, is confident for the 2022 financial year. It must be said that GE ended 2021 well, generating free cash flow from industrial operations of $ 3.8 billion in the last quarter. , for adjusted earnings per share of 92 cents compared to a consensus of 85 cents. The group anticipates improved profits and free cash flow this year. GE is thus targeting adjusted earnings per share ranging from $2.8 to $3.5, against $1.71 a year earlier. Annual free cash flow is now expected to be between $5.5 billion and $6.5 billion, compared to $2.6 billion in 2021.
3M , the American diversified industrial giant, announced for the quarter ended a decline in its profit, but quarterly results exceeded market expectations. Net income for the fourth fiscal quarter was $1.34 billion or $2.31 per share, compared to $1.41 billion for the corresponding period last year. Revenue rose marginally 0.3% to $8.6 billion. Expenditure reached $7 billion, compared to $6.7 billion a year earlier. The consensus was $2.02 adjusted EPS and $8.61 billion in revenue. The financial outlook for 2022 will only be unveiled on February 14.
American Express strengthened its financial guidance today, with historic credit card spending. For the fourth fiscal quarter, the group easily exceeded market expectations in terms of revenues and profits. Quarterly net profit was $1.72 billion and $2.18 per share, compared to $1.44 billion and $1.76 per share for the corresponding period last year. The FactSet consensus was $1.86 EPS. Net revenues totaled $12.15 billion for the period ended, compared to $9.35 billion a year earlier. The consensus was 11.5 billion. Stephen Squeri, CEO of AmEx, talks about the record level of card spending.
Tesla . Moody's has raised its rating on Tesla by two notches from 'Ba3' to 'Ba1', saying the automaker should maintain its leading position in the electric vehicle market.
Verizon , the American telecom operator, recruited 558,000 new mobile telephone subscribers in the fourth quarter, against 548,000 forecast by the research firm FactSet, with the rapid deployment of fifth-generation services.
Lockheed Martin , the US defense contractor, delivered quarterly profits above market expectations and confirmed its 2022 sales estimates. In the fourth quarter, profit was $2 billion or $7.47 per share, against $1.98 billion of consensus. Revenues were $17.7 billion in the quarter versus $17.67 billion in consensus. Annual EPS is now expected at $26.7, above consensus expectations.
Raytheon , another major defense player, beat the quarterly profit consensus but missed the revenue consensus. The annual guidance is also somewhat disappointing. Quarterly net profit was $686 million and 46 cents per share, compared with $135 million a year earlier. Quarterly revenue rose 3.8% to $17.04 billion, but so misses the consensus.
Meta Platforms , ex-Facebook, has developed a supercomputer with a new artificial intelligence presented as the fastest in the world. The AI Research SuperCluster, slated for release in the second half of the year, was designed in partnership with Nvidia , Pure Storage and Penguin Computing.
Regeneron and Eli Lilly are to watch, while the Food and Drug Administration has limited the use of covid treatments based on antibodies developed by the two groups, considering that they could not be used everywhere in the United States in view of their probable ineffectiveness against the Omicron variant.