Linea Mercati Interview 10/30/24
October 31, 2024
Wall St set to drop as Meta, Microsoft cost warnings highlight AI trade risks
October 31, 2024The New York Stock Exchange was trading higher on Wednesday shortly after opening, buoyed by good news from the US economy, even though corporate results were mixed.
Around 14:25 GMT, the Dow Jones gained 0.34%, the Nasdaq index 0.32% and the broader S&P 500 index 0.20%.
The New York stock market welcomed the day’s indicators, including the first estimate of US growth, which showed that the US economy had grown by 2.8% at an annualized rate.
This marks a slight slowdown (3% in the second quarter) and is slightly less than the 3% projected by economists.
But Chris Low of FHN Financial also saw in the Commerce Department report that consumption and investment were growing at a faster pace than expected, which he said puts into perspective the slight disappointment caused by the headline figure.
The economist also noted that the report showed a new lull on the inflation front.
“Unless we have a shock, a recession seems unlikely to us,” commented Oren Klachkin of Nationwide.
Another indicator of good performance was the report from the ADP consultancy, according to which the private sector created 233,000 jobs in October in the United States, double what was expected (115,000).
According to Samuel Tombs, this figure is likely to be quite far from the monthly employment report that will be released Friday by the Labor Department.
Aside from the fact that the ADP report is considered unreliable, it did not take into account much of the effects that hurricanes Helene and Milton are expected to have had on the U.S. economy.
These data, which demonstrate the strength of the American economy and could encourage the American central bank (Fed) to be more restrained in its rate cuts, have pushed up bond yields.
The yield on 2-year US government bonds stood at 4.13%, compared to 4.10% the previous day at the close.
For Peter Cardillo, of Spartan Capital, the market remains cautious because it is still waiting for many developments in the coming days, namely the PCE price index on Thursday, the employment report on Friday, the presidential election on Tuesday and the Fed meeting on the same day.
In addition, the New York Stock Exchange noted that “(company) results were mixed”, according to Peter Cardillo.
They led to “a little selling”, noted the analyst. “This is mainly linked to Caterpillar, which is weighing on the Dow Jones.”
The Irving (Texas) group was battered (-2.27%) after missing the target for its quarterly results and lowered its annual revenue target. The construction machinery manufacturer suffered in particular from a slowdown in the construction sector.
The Nasdaq benefited from Alphabet’s results (+6.71%), significantly higher than expected. Google’s parent company was driven by growth (+35%) in remote computing (cloud), which saw its operating income multiplied by more than seven.
The results of the “cloud” “confirm the hypothesis that large providers (of remote computing) are well positioned to benefit from the AI revolution”, reacted, in a note, Matt Britzman, of Hargreaves Lansdown.
Super Micro plunged (-27.67%) after the firm Ernst & Young terminated its contract to audit the group’s results.
The specialist in servers and remote computing infrastructures had been accused, at the end of August, of accounting manipulations by the hedge fund Hindenburg Research.
The social network Reddit soared (+37.69%) after publishing its first quarterly profit in its history, thanks in particular to contracts signed with AI developers who use conversations on the platform to train their software.
