Wall Street hesitates ahead of quarterly avalanche

Wall Street was slightly firmer in pre-trade on Tuesday, with the S&P 500 down 0.2%, the Dow Jones down 0.3% and the Nasdaq down 0.3%. One barrel of WTI brand oil rose 0.7% to $80.7 on the Nymex exchange. An ounce of gold fell by 0.3% to $1,916. The dollar index lost 0.1% against a basket of benchmark currencies.

American stock markets were closed yesterday for Martin Luther King Jr. Day, Monday. Amid the release of quarterly results across the Atlantic, the break marked the anniversary of the birth of the African-American pastor and civil rights activist. It is held on the third Monday of January.

The New York Fed’s Empire State Manufacturing Index for January 2023 came in at -32.9, the lowest since May 2020, versus the FactSet consensus reading of -7 and -11.2 a month earlier. fell to The index therefore descends into negative territory, signaling a deeper contraction in activity.

Earlier today, investors learned better-than-expected figures for China’s fourth-quarter GDP (+2.9%). Chinese industrial production rose 1.3% in December, well above expectations, while retail sales fell just 1.8% (FactSet consensus -7.9%). Excluding seasonal adjustments, Japanese retail sales rose 2.5% for November, compared with the consensus of 3.6%. In Europe, Germany’s consumer price index for December was no surprise at the final reading, down 0.8% from the previous month and up 8.6% year-on-year. The ZEW index gauges investor sentiment in Germany continues to recover and finds itself back in positive territory. The index reached 16.9 in January, after -23.3 in December and a consensus of -15. This is the highest level since Russia invaded Ukraine. The current situation index stands at -58.6 compared to -61.4 (-57.8 consensus) compared to the previous month.

Operators will have another meeting with inflation on Wall Street this week. The US producer price index for December will be released at 14:30 on Wednesday (consensus -0.1% month-on-month, ie 6.8% y-o-y compared to 7.4% a month ago; excluding +0.1% food and energy compared to the previous month, i.e. +5.6% in one year. It will be a notable new test, as the consumer price index released earlier this month confirmed that US inflation is gradually easing after accelerated monetary tightening by the Fed.

Tomorrow Wednesday, in addition to the producer price index, the markets will focus on the figures related to US retail sales, industrial production, business inventories, the real estate market, as well as the Fed’s economic Beige Book. On Thursday, investors will watch housing starts and building permits, weekly jobless claims and the Philadelphia Fed manufacturing index. Finally, the resale of existing homes will be announced on Friday.

On the other hand, the news of quarterly editions will be given on Tuesday. In particular, Morgan Stanley, Goldman Sachs, Citizens Financial Group, United Airlines or Interactive Brokers Group will publish. On Wednesday, traders will be watching the accounts of Charles Schwab, PNC Financial Services, Prologis, Alcoa and many others. On Thursday, Procter & Gamble, Netflix, Fastenal, M&T Bank or PPG Industries will be there. On Friday, the day will still be active with the quarterly Schlumberger or State Street.

Values

New York-based investment banking giant Goldman Sachs reported weaker-than-expected fourth-quarter profit, a drop of more than 60%, amid a larger-than-expected fall in investment banking and provisioning income for potential loan losses. Goldman said earnings for the three months ended December were $1.33 billion, or $3.32 per share, versus $10.81 a year ago and the consensus estimate of $5.56 a share. Group revenue fell 16% to $10.6 billion, also missing consensus estimates of $10.8 billion. Investment banking revenues fell 48% to $7.36 billion in 2022 compared to a year ago. Net income of $32.5 billion from the global banking and markets division still offset that weakness. Merger activity contracted nearly 40% in the fourth quarter from a record high in 2021.

Morgan Stanley, one of Wall Street’s major banks, reported adjusted earnings on Tuesday that beat market expectations. Fourth-quarter profit fell to $2.11 billion, or $1.26 per share, from $3.59 billion, or $2.01 per share, a year earlier, Morgan said. Adjusted earnings for the fourth quarter rose to $1.31 a share from $2.08 a year ago. Wall Street analysts expected Morgan Stanley to earn $1.25 per share (FactSet consensus). Fourth-quarter revenue fell to $12.75 billion from $14.52 billion a year earlier, and the consensus was $12.54 billion.

Apple. Taiwanese subcontractor Foxconn has appointed Michael Chiang as the new head of its iPhone assembly business after a tumultuous year in China, Bloomberg reported, citing people familiar with the matter. Chang replaces longtime leader Wang Chang-yang as head of iPhone assembly. The Foxconn factory in Zhengzhou, China, the world’s largest iPhone manufacturing plant, was hit hard late last year by the Covid-19 outbreak and restrictions imposed to control the virus – prompting thousands of workers to leave. . Reuters noted earlier this month that the site also faced labor action over pay issues, but the plant returned to nearly full production in December, with deliveries hitting about 90% of original plans.

Wall Street-listed Chinese e-commerce giant Alibaba will be closely watched today. Activist Ryan Cohen, who became one of America’s small business stars with his GameStop record during the ‘meme stock’ euphoria, has bought a stake in Alibaba to spur more share buybacks. People familiar with the matter told the Wall Street Journal that Cohen has bought a stake in Alibaba worth several hundred million dollars since the second half of 2022. Therefore, he intends to speed up the Chinese giant and increase share purchases. prices.

Microsoft may receive an antitrust warning from the European Union over its $69 billion bid to buy U.S. video game maker Activision Blizzard, people familiar with the matter told Reuters. The European Commission is reportedly preparing a document known as a statement of objections outlining its concerns about the deal, which will be sent to Microsoft in the coming weeks, according to agency sources. The EU’s antitrust agency has set April 11 as the deadline for making a decision on the deal. Microsoft announced this acquisition in January last year. US and UK regulators have already expressed concerns, but the US Federal Trade Commission will take legal action to block the deal.

Alphabet. Tech giant Alphabet’s (Google) site YouTube is testing free ad-supported streaming channels, the Wall Street Journal reported. People familiar with the talks told the WSJ that YouTube is talking to entertainment companies about putting shows and movies on its streaming hub, which could launch on a large scale this year. The article notes that the effort could put YouTube in competition with broadcasters like Roku and Fox.

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