Skip to content

Meta and the US recession weigh down the indices

The day after a new strong gesture from the Fed, which therefore raised the federal funds rate once again by 75 basis points last night, between 2.25% and 2.5%, also affirming its determination to fight against record inflation, the US rating should lose ground on Thursday. After a notable ‘rally’ yesterday led by the Nasdaq (+4.06%), the trend is negative before trading today, in the wake of poor Meta figures and the announcement of a new contraction in US GDP, materializing a “technical” recession. The S&P 500 fell by 0.2% before the market, the Dow Jones also by 0.2% and the Nasdaq by 0.5%. The barrel of WTI crude rose 2% to over $99. The ounce of gold takes 1.5% to $1,746. The dollar index gains 0.1% against a basket of currencies. Bitcoin rebounds 8% over 24 hours, on $23,000.

The advanced figures (first of three estimates) of the American GDP for the second quarter of 2022 have just fallen, and confirm, as the Biden administration had already hinted, a new contraction, for the second consecutive quarter, of the gross domestic product. national. US GDP therefore corrected by 0.9% on an annual basis in the second quarter, against a FactSet consensus of +0.8% and after a decline of 1.6% over the previous quarter. Personal consumer spending still appreciated at a rate of 1% for the second quarter, against 1.3% consensus and 1.8% a quarter before.

Note that the weekly jobless claims for the week ended July 23 were also announced today, and stand at 256,000, against 255,000 consensus and 261,000 a week before.

The Kansas City Fed regional manufacturing index for July will be announced at 5 p.m.

Yesterday’s comments from Fed chief Jerome Powell were welcomed by markets, leaving all possibilities open, from a possible slowdown in the pace of rate hikes to a potential further action of 75 basis points. Powell, at the end of the communication, therefore left investors to their discretion. Another significant rate hike might be appropriate at the September meeting, but Powell also says that decision will depend on the next economic data and that some indicators are already showing signs of slowing. Some clues suggest, according to JP Morgan, that we are closer to the end than the beginning of the tightening cycle. However, the leader of the Fed also left the door open for an additional strong gesture in September.

Values

Qualcomm, the American mobile technology giant, published last night for the quarter ended, adjusted earnings per share of $2.96 compared to a consensus of $2.86 and a level of $1.92 a year earlier. Revenues totaled $10.94 billion in the quarter ended June, narrowly beating consensus from $8.06 billion a year earlier. The title is however oriented downwards on Wall Street, on disappointing prospects. The designer of ‘chips’ for smartphones thus delivered guidance below market expectations, judging that the economic slowdown should affect consumer spending on mobile devices. For the fourth fiscal quarter, just started, revenues are thus expected to be between 11 and 11.8 billion dollars, compared to a consensus of 11.9 billion. Excluding items, earnings per share are expected to be between $3 and $3.3, against $3.26 consensus.

Meta, ex-Facebook, unscrewed before the stock market on Wall Street, erasing its gains the day before, following the publication of quarterly accounts marked by the first drop in income in the history of Mark Zuckerberg’s group. In addition, the group’s net profit fell by more than a third over the period ended. The social networking giant, parent company of Facebook, Instagram or WhatsApp, referring to the reduction of advertising budgets, therefore reported last night revenues of 28.8 billion dollars in the second quarter, against 28.9 billion consensus and $29.1 billion a year before. Worse, revenues for the quarter started are expected between 26 and 28.5 billion dollars, against more than 30 billion dollars of consensus.

Mark Zuckerberg, managing director and founder of the business, judges that it appears that we have “entered an economic downturn which will have a significant impact on the digital advertising sector”. The situation would seem even worse than a quarter ago, added the leader, whose group reaches 2.88 billion people every day using one of its social networks. “It was good to see a positive trajectory on our engagement trends this quarter coming from products like Reels and our investments in AI,” Zuckerberg also said, on a more optimistic tone. “We are devoting increased energy and focus to our key business priorities that unlock short- and long-term opportunities for Meta and the people and businesses that use our services.”

For the quarter ended, revenue was therefore down 1% year-on-year, while profit from operations fell 32% to $8.4 billion and operating margin fell to 29% from 43%. Net profit fell 36% to $6.69 billion, or $2.46 per share.

Ford, the Michigan automaker, climbed before the stock market on Wall Street, the day after a particularly convincing financial publication. For its second fiscal quarter, the group announced adjusted earnings per share of 68 cents, compared to a consensus of 45 cents and a level of 13 cents a year earlier. Revenues reached $40 billion, 16% better than the market consensus, against $26.8 billion a year earlier – when supply chain problems had hit production hard. Thus, the Dearborn group atomized the consensus by achieving 50% growth. The manufacturer maintains its profit estimates for the year and is actively looking for ways to offset the soaring costs. Adjusted Ebit is expected to be between 11.5 and 12.5 billion dollars, up 15 to 25%. Adjusted free cash flow is expected between 5.5 and 6.5 billion.

Best Buy, the American leader in the distribution of consumer electronics products, corrects before the stock market on Wall Street after a warning on results and sales. The group warned of a bigger decline in annual sales than previously estimated, amid record inflation limiting spending on discretionary items such as computers and televisions. The warning follows a similar announcement from Walmart on Monday. “As we look ahead to the second half of the year, based on continued uncertainty regarding macro-economic conditions and demand for consumer electronics, it is difficult to assess how long the weaker selling environment and the impact on our business,” Best Buy Chief Financial Officer Matt Bilunas said. The company said it now expects full-year comparable sales to fall by around 11%, compared to its previous forecast of a 3% to 6% drop. .

Fiscal second quarter like-for-like sales are now expected to decline 13%, for an adjusted operating margin of around 3.7%. The annual adjusted operating margin is expected to be around 4%, compared to a previous range of 5.2 to 5.4%.

Pfizer, the American pharmaceutical giant, beat the second-quarter profit consensus and tightened its annual targets upwards. With strong contributions from its covid-related products, Comirnaty and Paxlovid, the group manages to generate a net profit of 9.9 billion dollars or $1.73 per share over the period ended, against 5.5 billion and 98 cents. by title one year before. Excluding items, adjusted earnings per share were $2.04, versus a FactSet consensus of $1.72. Revenue soared $8.8 billion, or 47%, to $27.7 billion. Pfizer raises its annual revenue estimates and adjusted diluted EPS by respectively $2 billion and 24 cents per share, but the impact of currency effects will play a negative role. Annual revenues are therefore expected between $98 billion and $102 billion, while adjusted EPS is expected between $6.3 and $6.45.

Merck, the American pharmaceutical company, exceeded market expectations for the second quarter, with strong sales of its blockbusters Keytruda and Gardasil. Adjusted quarterly earnings per share were $1.87, above the market consensus of $1.7. Net profit was $4.74 billion, compared to $1.55 billion for the corresponding period last year. Keytruda dominated the quarter. The cancer blockbuster generated $5.3 billion in revenue, against the consensus $4.9 billion. Total quarterly revenue thus climbed 28% to $14.6 billion. Merck raises its annual revenue guidance to between $57.5 billion and $58.5 billion. Annual earnings per share are now expected between $7.25 and $7.35.

Thermo Fisher Scientific, the American leader in research and analysis equipment, published for its second fiscal quarter ended early July 2022, revenues of $10.97 billion, GAAP diluted earnings per share of $4.22 and adjusted EPS of $5.51. The consensus was $4.99 quarterly adjusted EPS for $9.97 billion in revenue. The group reports very solid financial results in the second quarter, with organic growth of 13% in basic revenue and $0.63 billion in revenue related to Covid-19 tests.

Mastercard, the colossus of American payment systems, announced a jump in quarterly profits as cross-border spending and travel resumed. The group does not yet see a major impact of inflation on consumer spending, but will continue to monitor it. In the quarter ended June 2022, earnings therefore represented $2.3 billion or $2.34 per share, compared to $2.1 billion and $2.08 per share a year earlier. Cross-border volumes soared 58% in local currencies. Adjusted EPS was $2.56, up sharply by 31%, against $2.36 consensus. Global revenue soared 21% to $5.5 billion, from $5.3 billion expected by analysts.

Leave a Reply

Your email address will not be published.