(Boursier.com) – After another very volatile session on Wall Street on Tuesday, the mess ended, Dow Jones barely saw a slight increase, while the Nasdaq fell again by more than 2% after social networks melted after the “profit warning” ». “with Snap Inc. (-43%!) On the economic side, PMI activity indices slowed in May in the US, even if they are still in the expansion zone. Oil fluctuates amid fears of demand and the fact that Hungary continues to block the EU embargo on Russian oil. Gold and bonds were a safe haven for investors.
In conclusion, c Dow Jones rose 0.15% to 31,928 points (after + 1.98% on Monday), supported, in particular, McDonald’s (+ 2.7%), while the broad index S & P500 fell 0.81% to 3941 points (after + 1.86% on Monday), and that Nasdaq Compositerich in technology and biotech stocks, fell 2.35% to 11,264 points (+ 1.59% on Monday).
Earlier in the day, a relapse occurred in other world markets. Index 50 euros Stoxx lost 1.64%. DAX 30 in Frankfurt it fell by 1.8%, while in Paris the CAC 40 fell by 1.66%. In Asia, in Nikkei lost 0.94% in Tokyo and in China composite shanghai fell by 2.4%.
Social networks are biting dust
On Wall Street, six of the 11 sectoral indices of the S&P 500 on Tuesday night ended in deficit, starting with communications services (-3.7%), which include social networks. Snap Inc., the parent company of Snapchat, fell 43% after warning on Monday night that its revenue and Ebitda for the second financial quarter will be below the low range of the social network forecast. After Snap, Meta-platformsparent company Facebook and WhatsApp (-7%), Twitter (-5.2%), pinterest (-23.4%) and ABC, the parent company of Google (-4.9%), it all ended abruptly. Investors fear declining advertising revenues amid an economic slowdown and rising rates that could limit advertisers’ spending.
A certain slowdown in the economy was recorded by the PMI activity indices in May in the United States, published on Tuesday. Thus, the composite index of “flash” was 53.8, which is much lower than the consensus of FactSet, which was at level 56..
Signs of economic slowdown in the United States
Detailed index Production PMI reached 57.5, close to expectations, but lower than April (59.2) and the lowest level in 3 months. As for service index, it was the lowest in 4 months, 53.5, below the consensus (56) and below the April (55.6). All of these indices remain above the 50 mark, which separates expansion from contraction, but now seems to be affected by the economic situation, which is complicated by rising costs and rising interest rates.
Moreover, the American real estate sector is beginning to show signs of cooling. Sale of new houses Thus, in the United States in April there were 591,000 against 750,000 market consensus and after 709,000 in March.
Finally,Richmond Fed Production Index was a big disappointment in May, at -9, against +12 from the FactSet consensus. Below zero, this signals a reduction in activity in the region.
The Fed still decided to raise the rate quickly
in Fed Chairman Jerome Powell, is scheduled to perform on Tuesday night. waiting Atlanta Fed boss Rafael Bosticestimated that the suspension of rate increases in September may make sense to assess the impact. Mary Daly, President of the San Francisco Feddecided that the Fed could continue to tighten monetary policy without causing a recession. Esther George of the Kansas City Federal ServiceFinally, predicts that the rate of federal funds will reach 2% by August, but adds that further rate increases will be determined by the evolution of inflation.
In the bond markets, investors return to buying government bonds, which are considered safe in conditions of turbulence, which causes rates to fall (moving in the opposite direction to prices). Indicator T-Bond in 10 years lost 11 basis points to 2.75% on Tuesday night, and the rate T-Bond for 2 years recurrence of 15 bps at 2.47%. In the euro area, the yield of the 10-year German fund fell by 5 basis points to 0.96%, despite Christine Lagarde’s remarks about the cessation of negative ECB rates in September next year and the rejection of the risk of recession.
The euro was supported by Christine Lagarde’s phrase “falcon”.
Dollar index decreased on Tuesday evening by 0.3% to 101.77 points against a basket of reference currencies, while euro rose another 0.4% to $ 1.0732 after rising 1.2% the day before thanks to a new, more “hawkish” tone of the head of the ECB. It is now clear that European Central Bank officials intend to rapidly raise key interest rates to positive territory (from -0.4% at the moment) amid rising inflation, despite the risks to growth.
After the last setbacks, bitcoin is still trying to reach the $ 30,000 mark, registering at $ 29,350 on Tuesday night, up 0.2% in 24 hours. It is still far from its November 2021 record of almost $ 69,000. gold on Tuesday night by 1% to $ 1865.40 for the June contract Comex, which is a two-week high.
Finally, oil prices came to a halt, divided by a resumption of demand in China and a rift in the EU over an embargo on Russian oil. Barrel of American light oil WTI (July futures) on the Nymex fell 0.5% to $ 109.77, whereas Brent Validity in the North Sea in July increased by 0.12% to $ 113.56.
VALUES TO BE HEALED
Remove lost 43% (!) after a profit warning issued Monday night. The parent company Snapchat took with it the entire industry. thus, Goalex-Facebook, stumbled by 7%, while pinterest fell by 23.4%. The same Twitteron which Elon Musk recently bet (since suspended) fell 5.2% and ABC lost 4.9% …
Remove said Monday night that the economy is deteriorating faster than expected. Evan Spiegel’s California group has noticed a particular weakness since late April. As a result, the company believes it should report revenue and adjusted Ebitda below the low target range for the second quarter of 2022. According to an internal report seen by Reuters, Spiegel warned employees that the company will slow down hiring this year. The CEO of Snap also listed a number of issues, including rising inflation, interest rates, disruptions in the supply chain or labor market, changes in platform policy and the impact of the war in Ukraine.
Some planned hires will be postponed until next year, but the group still expects to hire more than 500 by the end of the year. Facebook and Uber have already announced similar measures earlier this month … Snap’s management also intends to identify other cost-cutting measures. Last month, Snap said it expects revenue growth in the second quarter of 20-25% over the same period last year.
vmware (-2.9%) retreated after a jump of 24.8% on Monday due to rumors of a potential takeover Broadcom (-0.4%). According to the Wall Street Journal, Broadcom will indeed offer a cash and stock offer to take over VMware’s cloud computing specialist. Broadcom has a market capitalization of about $ 215 billion, while VMware weighs in at $ 50 billion. Now the Wall Street Journal adds that the talks are about a $ 60 billion transaction, and that the two companies will consider announcing the deal on Thursday. Thus, the offer could be about $ 140 for one VMware program, according to people familiar with the issue quoted by the WSJ. Broadcom reportedly intends to turn to several banks to obtain a debt package of about $ 40 billion to finance the acquisition.
Ralph Lauren (+ 0.2%) on Tuesday provided solid annual forecasts, expecting revenues to exceed expectations with European and American demand. In the fourth financial quarter, which ended, the New York group achieved a profit of 18% to 1.52 billion dollars against 1.46 billion consensus. Growth in North America reached 19%. Adjusted diluted earnings per share were 49 cents, excluding restructuring and other items. In the financial year 2023, which has just begun, the group expects growth of 6-9% in the unchanged currency, which is much higher than market expectations.
Best buy (+ 1.2%), the American giant in the distribution of electronic products, lowered its estimates of annual profits, in particular due to inflation. In the first financial quarter, which ended in late April, the retailer recorded a decline in sales of 8%, which, however, is less than the 9% decline projected by consensus. Total sales amounted to 10.65 billion, compared to 11.64 billion. Adjusted earnings per share were $ 1.57. US $ 1.61 The United States by consensus. Now the group expects annual sales of similar indicators to decrease by 3-6% compared to previous forecasts, when they ranged from -1% to -4%. Annual adjusted earnings per share are expected to be $ 8.4 to $ 9 compared to $ 8.85-9.15 previously.
Abercrombie & Fitch fell 28.6%, while the group regrets the loss for the first quarter and gives very cautious instructions. For the quarter ended, the American clothing retailer announced a net loss of $ 16.5 million and 32 cents per share against a profit of $ 41.8 million a year earlier. The adjusted loss per share was 27 cents, which is much heavier than expected. Sales were $ 813 million, up from $ 781 million a year earlier. The annual benchmark was also lowered.
Enlarge video (+ 5.6%), one of the stars of stock market restraint on Wall Street, which has since lost all its profits published in the period from March 2020 to October 2020 (during this period, the title has quadrupled!), trying to get revenge. . The California group, which provides video conferencing services that allow online meetings, chat and mobile collaboration, published reliable quarterly reports last night. Zoom has also raised its year-on-year adjusted earnings recommendations, pricing in line with sustained corporate demand in the hybrid environment. In the first quarter, revenues from business customers grew by 31%, or 52% of business. The adjusted operating margin reached 37.2% for the quarter ended in late April. Quarterly earnings exceeded the consensus, and quarterly forecasts also began to exceed expectations.
Total revenue for the first quarter rose 12% to $ 1.07 billion. GAAP net income was $ 114 million, 37 cents per share, while adjusted earnings were $ 316 million and $ 1.03 per share. During the year, Zoom expects adjusted earnings per share from $ 3.7 to $ 3.77, a sharp change from previous recommendations. Total revenue is expected to range from $ 4.53 billion to $ 4.55 billion. Revenues from non-GAAP non-GAAP operations are expected to range from $ 1.48 billion to $ 1.5 billion.