(Boursier.com) — The American market is now showing a sharp decline this Tuesday, after its three-day break. Nvidia dropped more than 6% and weighed significantly on the markets, which have remained very volatile since its quarterly publication, which was considered a bit short. The S&P 500 fell by 1.51% to 5,564 points, while the broad index was approaching its historic peaks. The Dow Jones lost 1.19% to 41,069 points from its highs. The Nasdaq finally fell by another 2.29% to 17,307 points. Yesterday, the American markets were closed for ‘Labor Day’, but the agenda is relatively busy for this four-day week… On the Nymex, the barrel of WTI crude corrected by 4% below $71. Brent is moving around $74 per barrel. The ounce of fine gold fell by 0.7% to $2,481. The dollar index stabilizes against a basket of reference currencies.
Today’s manufacturing indices are rekindling recession fears, while later in the week, it will be the US employment figures that will attract all the attention… The final US manufacturing PMI index for August 2024 came in at 47.9, very close to the market consensus of 48, as well as the flash (preliminary) reading which was also 48. The index therefore remains below the 50 mark, which signals a contraction in activity.
The U.S. ISM manufacturing index for August 2024 came in at 47.2, compared with the FactSet consensus of 47.5 and 46.8 a month earlier. The index signals a contraction in domestic manufacturing activity.
U.S. construction spending for July 2024 was down 0.3% from the previous month, according to the daily report, compared with the consensus estimate of +0.2% month-over-month.
Regarding expectations for monetary easing, the FedWatch tool shows a 61% probability of a quarter-point rate cut on September 18, at the end of the next policy meeting, which would put the federal funds rate between 5 and 5.25%. The probability is 39% of a 50 basis point rate cut, which would put the range of 4.75 to 5%. Jerome Powell’s recent comments have shown that this rate cut is certain, but it remains to be seen how deep it will be by the end of the year. According to the same FedWatch barometer, the dominant probability for December 18, the last policy meeting of the year, is a range of 4.25 to 4.50% (‘prob’ of 44.1%), which would represent a rate cut of 1 percentage point. The probability of the 4-4.25% range is 26.8%.
Tomorrow, the July international trade balance in goods and services (2:30 p.m., consensus -$78.5 billion), industrial orders for the same month (4 p.m., consensus +4.8%) and the JOLTS report on July job openings (4 p.m., consensus 8.1 million) are expected in the afternoon, while the Fed’s Beige Book of economics will be announced in the evening.
On Thursday, investors will be watching the latest Challenger, Gray & Christmas survey on U.S. layoffs, as well as ADP’s August private employment report. Weekly jobless claims, quarterly productivity figures, and the final composite PMI and ISM services indices will be released the same day. Finally, the government’s monthly employment report for August 2024 will be released on Friday, with FactSet’s consensus forecast for 162,000 jobs created, including 140,000 in the private sector, for an unemployment rate of 4.2%. This will be an important test, as such figures, which are slightly up from July, are likely to further dispel any fears of a recession – or, on the contrary, fuel them in the event of a nasty surprise.
In corporate news on Wall Street, after poorly received results from Nvidia Last week, operators will follow the accounts of this Tuesday Zscaler (after the stock market), then tomorrow those of Copart (after closing), C3.ai (post-session), Respect (before stock market), Caseys General Stores, Hormel Foods (precedence), Dollar Tree (before opening), Dick’s Sporting Goods (pre-session) and Hewlett Packard Enterprise (after exchange).
Nio Inc et Toro Company will announce before the market on Thursday, while Broadcom, Samsara, Guidewire Software, DocuSign et UiPath will publish after closing.
The values
Tesla (+1%) intends to produce a six-seater version of its Model Y in China from the end of next year, according to two sources from the Reuters agency, and that the group has also just achieved slightly more robust Chinese sales for the month of August, with more than 63,000 units sold. This is therefore the best month for Elon Musk’s group in China since the start of 2024, with around 63,000 units, 37% more than in July. In August 2023, the group had sold around 64,700 electric cars in China. In comparison, rival BYD posted 35% growth in unit sales in August 2024 and compared to last year, a performance that is still significantly more dynamic than Tesla. BYD sold a record 370,854 vehicles in China last month.
Apple (-2%) will face stiff competition from Huawei Technologies, which Bloomberg notes is preparing to launch new products. The new products will be presented on September 10. Huawei plans to unveil “the world’s first commercial smartphone that folds twice,” according to a person familiar with its plans cited by Bloomberg. The company is also preparing to launch an Aito electric vehicle, though the final products that will be marketed are subject to change, the person said, asking not to be named regarding private plans. Apple, meanwhile, is launching its new family of iPhone handsets and accessories on September 9 and is looking to convince consumers to upgrade their devices.
Southwest Airlines (+3%), the American airline is gaining ground on Wall Street, while activist investor Elliott Investment Management now owns 10% of the group’s ordinary shares, which would allow it, according to Reuters, to call an extraordinary general meeting.
US Steel (-3%) is under pressure on Wall Street, while the Democratic candidate for the American presidential election, Vice President Kamala Harris, considered that the steel group should remain in domestic hands in the USA, which dampens hopes of a finalization of the takeover of the group by the Japanese giant Nippon Steel Corp.
Intel (-7%), which must cut more than 15% of its global workforce and has just suspended its dividend in order to reduce its costs, is not yet finished with its adjustments. The CEO of the affair, Pat Gelsinger, as well as its main executives, should thus present to the board of directors a plan aimed at eliminating redundant activities and reorganizing capital expenditures during the month, according to a source familiar with the matter quoted by the Reuters agency. The agency also judges today that the continued fall of the share price could call into question its presence within the historical Dow Jones index.
Boeing falls 8% on Wall Street, while Wells Fargo & Co has just published a particularly negative note on the file of the American aeronautics giant. The broker considers it difficult to perceive an upward potential on the value. The title falls back to the lowest since November 2022, while analyst Matthew Akers of Wells revises his advice from ‘in line weighting’ to ‘underweighting’. The specialist mentions in particular an expected dilution of shareholders via a probable offer of additional shares. “A substantial additional fundraising is necessary in the coming years,” says Akers, quoted by Bloomberg.
