Wall Street is trying to bounce back moderately, oil is falling

(Boursier.com) – The New York Stock Exchange manages to recover on Friday, after a difficult week marked by fears of recession, after the Fed’s monetary policy tightened by 0.75 points on Wednesday night and a very “hawkish speech” by the US Federal Reserve. for whom the fight against inflation is now a priority. Oil prices fell more than 6% on Friday amid worries about demand and the strong dollar affecting oil prices.

Two hours before closing in Dow Jones rose 0.3% to 30,016 points, while the broad index S & P500 recovered by 0.6% to 3689 points and that Nasdaq Compositerich in technology and biotech stocks rose 1.8% to 10,839 points after falling 4.08% on Thursday.

On Thursday night, US indices fell sharply, the Dow lost 2.4% and Nasdaq – 4.1%. Operators remain extremely nervous, faced with the prospect of further tightening of monetary policy, amid record inflation and while the economy is already showing significant signs of weakness. At Nymex, a barrel of oil WTI It is now down 7.3% to $ 108.96 and Brent is down 6.2% to $ 112.36. An ounce of gold fell 0.5% to $ 1,840.60 and fell nearly 2% during the week. The dollar index, which adjusted on Thursday, rose sharply by 1% against a basket of currencies, close to the highest level in 20 years. After the recent fall, bitcoin fluctuates around $ 20,500.

Four Witches’ Day is celebrated on Wall Street this Friday, which sometimes (but less often) increases market volatility. This stock market event, which takes place 4 times a year (Friday, June 3, March, September and December), corresponds to the simultaneous termination of 4 types of contracts: options and stock options, as well as futures for indices and stocks .

According to the Fed on Friday, industrial production in the US in May 2022 increased by only 0.2% compared to the previous month, against 0.4% market consensus and 1.4% compared to the previous month. Production in the manufacturing industry fell by 0.1% compared to April compared to the consensus of + 0.4%. Finally, the capacity utilization rate was 79% against 79.2% of the consensus and 78.9% a month earlier.

The Index of Leading US Conference Board Indicators for May 2022 is expected to fall 0.4% from the previous month, according to consensus, after an equivalent decline in April – according to updated data.

Finally, the Fed’s Jerome Powell is intervening in Washington, although the US Federal Reserve has just raised its rate by 75 basis points on federal funds, between 1.5 and 1.75%, a scale not seen since. 1994, of course, to combat galloping inflation. Markets fear that this accelerated tightening of monetary policy by the Fed will lead to a recession.

Powell’s speech today in his opening remarks at a conference on the international role of the dollar did not provide any new guidance on monetary policy. The Fed leader has just reaffirmed the bank’s commitment to return inflation to the 2% target and ensure financial stability to encourage the international community to hold and use the dollar.

For his part, Neil Kashkari of the Fed in Minneapolis said there was a high probability of another rate increase of 75 basis points in July. The Fed and the ECB would have enough authority to curb inflation without causing a deep recession, as they did 40 years ago, Fed Secretary James Bullard said today. “The Fed and the ECB have a lot of confidence, which suggests that a soft landing is possible,” said Bullard, who may have read poorly on recent US statistics.

“The Committee’s commitment to restore the price stability needed to maintain a strong labor market is unconditional,” it said in its semi-annual report on congressional monetary policy, as Jerome Powell testified next week to lawmakers about the Fed’s plans to fight. inflation while maximizing employment.

VALUES TO BE HEALED

Adobe (+ 0.3% after -4% at the beginning of the session). Following its publication on Thursday evening, the headline does not produce results or sales that exceed market expectations for the second financial quarter, as well as cautious forecasts for the current financial year. The leadership spoke about the “uncertain” environment, referring to the negative impact of the currency and the consequences of the war in Ukraine. In the second fiscal quarter ended June 3, the group, known for its InDesign, Photoshop and Acrobat products, earned net income of $ 1.18 billion, up 6% year-over-year. Adjusted earnings per share were $ 3.35 against $ 3.31 expected by FactSet analysts. Quarterly sales reached $ 4.39 billion, up 14% from last year, slightly higher than expected at $ 4.34 billion.

On the other hand, management changed its annual forecast to $ 13.50 earnings per share for revenue of $ 17.65 billion, while analysts hoped for $ 13.66 and $ 17.85 billion, respectively. In December, Adobe forecast earnings per share of $ 13.70 and sales of $ 17.90 billion for the fiscal year ended in late November. Thus, Adobe joins a cohort of technology companies, including Microsoft and Sales department, who reported the negative impact of a strong dollar on their income, which led to a decline in their annual forecasts. The dollar, backed by higher inflation in the Federal Reserve, has hit a 20-year high against a basket of currencies, including the euro, yen and pound sterling, in recent days.

A strong dollar, on the one hand, makes American exports less competitive and, on the other hand, reduces revenues received in other currencies and converted into dollars in the accounts of multinational companies.

Twitter (-1.3%). Elon Musk, who now intends to buy Twitter, spoke yesterday with the staff of the platform, for the first time since its initial offer of 44 billion dollars, made two months ago. During a virtual meeting at City Hall, Musk hinted that Twitter should be reduced, saying some optimization was needed. He was also asked about the moderation of the site and its political preferences. He called himself moderate and open to freedom of expression, and the social network, he said, must tolerate extremes “within the law.” The billionaire has expressed a desire for the network to reach at least a billion users against 229 million at the moment. He also noted that publicity will remain important in the group’s model, going back a bit to his previous comments on the subject. “I’m not against advertising. I would probably talk to advertisers and say something like, hello, let’s just make sure that advertising is as interesting as possible.”

Musk did not provide details on the completion of the deal, as well as a possible revision of the price expected by Wall Street. Asked about possible layoffs, he said that “some rationalization of staffing and costs” would be needed. The staff also wanted to know more about Mask’s vision for telecommuting, while they still have a lot of freedom in telecommuting, and the multibillionaire has already expressed his hostility. You are hereconsidering it impossible to develop great products by working remotely and urging employees to return or risk believing that they are being laid off.

Musk said he believes Twitter employees should move to work in the office, but expressed readiness to make a few exceptions. Prejudice should be “strongly in favor of personal work, but if someone is exceptional, remote work may be acceptable.”

Remove (+ 2%), the parent company of the free video and photo sharing program Snapchat, will test the features of paid subscriptions, according to The Verge. Spokeswoman Liz Markman told The Verge that the company is conducting “initial internal testing” of Snapchat Plus, which will provide users with early access to features and other benefits. Remember that Snap continues to unscrew on Wall Street, especially since the end of May saw the release of mixed quarterly results with a warning about the income and profits of the second financial quarter, which ended in late June.

Ali Baba (+ 1%) is progressing on Wall Street, while according to Bloomberg, the People’s Bank of China has accepted Ant Group’s request for a potential IPO. Reuters also quotes a rumor that China’s central bank has accepted Ant’s request for permission to set up a financial holding company to resume a long-delayed plan by the fintech giant. Ant Group is a subsidiary of e-commerce giant Alibaba.

JD.com, a Chinese e-commerce group, jumped 4.6% on Wall Street. JD.com will really explore the possible expansion of food delivery. These plans were confirmed by JD Retail general manager Xin Lijun in an interview with Bloomberg. This would put the Chinese e-commerce giant in direct competition with Alibaba and Meituan, which dominate this business in China.

US Steel (+ 2.6%), the American metallurgical group, opposes firm forecasts for the second financial quarter. Therefore, last night the group announced that it expects adjusted net income per share for the period from $ 3.83 to $ 3.88. “We expect to continue to record highs in the second quarter, with each business segment making a significant contribution to profitability,” said David B. Berritt, President and CEO of US Steel. “Our broad end-market reach allows us to remain resilient as demand comes from a diverse customer base, including the renewable energy market.”

Centennial (+ 0.8%). The health insurance company has just raised its financial estimates in terms of profits and added $ 3 billion to its share repurchase program. The group also intends to reduce its real estate presence. Therefore, these good intentions to create value are welcome. The group now expects adjusted earnings per share in the range of $ 5.55 to $ 5.7 for 2022. A $ 1 billion debt redemption plan is also being announced. Revenue from premiums and services in 2022 is expected to range from $ 134.3 billion to $ 136.3 billion.

seagen rose 15.5%, and according to the Wall Street Journal, the American pharmaceutical giant Merck (-1% o) would study the acquisition of a biotechnology firm. The WSJ cites sources familiar with the matter. Negotiations have been going on for some time, but no agreement can be avoided, the newspaper reports. Seagen now weighs nearly $ 30 billion on Wall Street, compared to $ 215 billion at Merck & Co. The WSJ also indicates that other suitors will also appreciate the Seagen file.

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