Wall Street set for tepid open after strong GDP data
July 25, 2024
Linea Mercati Interview 7/25/24
July 26, 2024The New York Stock Exchange opened without direction on Thursday, stabilizing after the slump the day before thanks to a good growth figure in the United States, which tempers concerns linked to an economic slowdown.
Around 1:50 p.m. GMT, the Dow Jones nibbled 0.15%, the Nasdaq index crumbled by 0.18% and the broader S&P 500 index was close to balance (-0.04%).
On Wednesday, the Nasdaq dropped 3.64%, a first since October 2022.
The New York market seemed to be heading towards a new decline before the opening, but the publication, by the American Department of Commerce, of a growth estimate of 2.8% at an annualized rate for the second quarter calmed the nerves of investors.
The figure is significantly higher than that of the first quarter (1.4%), but also the 2% announced by economists.
Peter Cardillo of Spartan Capital noted that consumption has accelerated and that, at the same time, inflation has slowed, according to the ministry report.
“We have just experienced several days of marked decline, so (the growth figure) lays the foundations for a small rebound,” estimated the analyst.
After falling earlier to its lowest level in almost six months, the yield on 2-year US government bonds recovered, at 4.40%, compared to 4.41% the day before at closing.
“For the Fed (American central bank), these data encourage caution, (…) but the decline in inflation encourages us to think that a rate cut remains the most likely scenario”, in September, commented Rubeela Farooqi of High Frequency Economics in a note.
Despite this enchanting picture, the market remained reserved, away from technological stocks, shaken the day before.
Superstar of the stock market for 18 months, chip designer Nvidia was once again in the red (-1.21%).
In two weeks, the specialist in the famous graphics cards essential to the development of generative artificial intelligence has fallen by more than 16%.
Over the sequence, more than $500 billion in capitalization has vanished.
The New York Stock Exchange also took the time to digest a new wave of company results, with a contrasting tone.
Ford was shaken (-16.39%) after reporting, Wednesday after the stock market, a net profit far from expectations. The manufacturer attributed this poor performance to increased costs linked to its warranty program.
Investors also regretted that the Dearborn (Michigan) group only confirmed its annual objectives while its competitor General Motors raised them on Tuesday.
The market also attacked Honeywell (-6.00%), despite better results than analysts predicted. Operators mainly retained the downward revision of the annual net profit objective.
The Warner Bros Discovery media group plunged after the announcement, Wednesday after the stock market, of the loss of broadcasting rights to the North American professional basketball league NBA. This is a snub for WBD, which counts on sport as a flagship product for its TNT cable channel but especially for its Max streaming platform.
Among the few good surprises of the day, one of the toy references, Hasbro (+5.67%), whose turnover decreased less than expected. The Pawtucket (Rhode Island) group was able to count on its video games or role-playing games to limit the damage and raised its annual forecasts.
The market was understanding with American Airlines (+3%), victim, like most other American companies, of an overcapacity problem, but whose net profit was higher than expected. The company is also paying the price for its strategy oriented towards direct sales to the public, considered a failure, and has lowered its annual net profit target.
Its competitor Southwest Airlines was also sought after (+2.33%), although its results exceeded market projections.
The Dallas (Texas) company expects a decline in its sales in the third quarter. To generate revenue, it intends to move upmarket, in particular by returning to the free seating of passengers.
