Zhitong Finance learned that Wall Street's enthusiasm for the stock market subsided because many traders were unwilling to continue to pour into the stock market after a strong rebound in early May. US stocks closed on Wednesday, with the Dow initially rising 170 points, or 0.4%; the S&P 500 index fell slightly, still below the 5,200 point mark it briefly hit this week; the NASDAQ fell 0.18%. Tesla (TSLA.US) and Google's parent company Alphabet (GOOGL.US) led the market decline.
[US Stocks] The Dow Jones index closed up 172.13 points, or 0.44%, to 39056.39 points; the S&P 500 closed down 0.03 points, or 0.00%, to 5187.57 points; the Nasdaq Composite closed down 29.80 points, or 0.18%, to 16302.76 points. Tesla (TSLA.US) closed down 1.7%, while Intel (INTC.US) fell more than 2%. The Nasdaq China Golden Dragon Index closed down 0.7%. Canadian e-commerce Shopify (SHOP.US) fell more than 18% after first-quarter results were better than expected but warned that gross margin for the second quarter would drop by about 50 basis points month-on-month and that revenue prospects would be affected by the logistics business.
[European stocks] The main indices of European stocks rose. The German DAX30 index rose 0.37%, the French CAC40 index rose 0.69%, the European Stoxx 50 index rose 0.45%, and the British FTSE 100 index rose 0.49%.
[Asia Pacific Stock Market] The Nikkei 225 Index fell 1.63%, the Singapore Straits Times Index fell 1.08%, Vietnam's VN30 Index rose 0.15%, and Indonesia's Jakarta Composite Index fell 0.49%.
[Cryptocurrency] Bitcoin fell 1.3% to $62,180.3; Ethereum fell 1.6% to $3000.6.
[Gold] COMEX's June gold futures closed down 0.08% to $2322.3 per ounce; spot gold was slightly above $2309, down about 0.2% during the day.
[Crude oil] WTI crude oil futures for June closed up $0.61, or 0.78%, to $78.99 per barrel; Brent crude oil futures for July closed up $0.42, or 0.51%, to $83.58 per barrel.
[Metals] London Metals fell; Lunn nickel fell by 1.85%; Lunzn zinc fell 1.69%, Lun copper fell 1.27%, and Lunan aluminum fell 0.95%.
[Macro News]
Federal Reserve Collins: The economy may need to weaken to reach the 2% inflation target. Federal Reserve Collins said that the US economy needs to cool down to bring the inflation rate back to the Fed's target level of 2%. When talking about monetary policy, Collins said, “The recent unexpected rise in economic activity and inflation indicates that it may be necessary to maintain the policy at the current level until we have greater confidence that inflation will continue to move towards 2%.” In his speech, Collins said, “Overall, as we assess changing prospects and risks, policies are still in a good position to respond to upcoming information.” She also said she is “optimistic” that the Federal Reserve can reduce the inflation rate to 2% “within a reasonable period of time and while the labor market remains healthy.” Furthermore, she said that the policy has no pre-defined path — it requires decisions based on a systematic and thorough evaluation of a broad range of information.
Société Générale: As profit margins increase, strong corporate profits will continue to drive the S&P 500 index to 5,500 points by the end of this year. Manish Kabra, head of US equity strategy at Societe Generale Bank, wrote that “profit is the glue in this cycle,” adding that 2024 should be viewed as “a year of inflation, not a year of stagflation,” as the growth of earnings per share is expected to accelerate further. She pointed out, “As the profit decline of 2022 to 2023 is over, profits are now on the recovery track. Later this year, they should resume double-digit growth and receive widespread participation. However, by 2026, sales growth is expected to hover at a low to medium level in single digits, which indicates that so far, the recovery in earnings has mainly led to profit margin growth while cutting costs and easing inflationary pressure.”
The decline in US crude oil inventories suggests a tightening market. Oil prices erased earlier declines after weekly data from the US Energy Information Administration (EIA) showed a decline in US inventories, suggesting tighter market supply. Data showed that crude oil inventories fell by 1.36 million barrels last week, a decline greater than market expectations. This breakthrough shows that traders regard this news as the first bullish indicator among many bearish technical indicators. Dennis Kissler, senior vice president in charge of trading at BOK Financial Securities, said that the EIA's more reliable crude oil inventory data offset the sharp rise in API data, which enabled some bears to begin to make up for positions sold late yesterday and in this morning's trading.
Russia cut crude oil production less than promised last month. According to foreign media calculations based on official data, Russia cut crude oil production last month less than promised. Last month, the average daily production of Russian crude oil was slightly below 1.285,000 tons. According to the normal calculation of 7.33 barrels per ton, it is equivalent to 9.418 million barrels per day, a decrease of about 219,000 barrels from March, and about 319,000 barrels higher than the level stipulated in the agreement reached with OPEC. In April, Russia promised to reduce production by 350,000 barrels per day compared to the previous month. This is another move after announcing a reduction of 500,000 barrels per day in February 2023. Russia's production target for April is 9.09 million barrels per day.
Goldman Sachs: The average price of Brent crude oil is predicted to be 82 US dollars/barrel in 2025. Goldman Sachs still expects Brent crude to stay in the range of $75-90 per barrel in most cases. Goldman Sachs still predicts an average Brent crude oil price of $82 per barrel in 2025. OPEC is likely to extend production cuts in June due to increased inventories. It is no longer expected that OPEC+ will announce the lifting of some voluntary production cuts in June.
[Individual Stock News]
The peak summer travel season is approaching, but Airbnb (ABNB.US) announced weak Q2 guidelines. According to the data, the company's Q1 revenue was US$2.14 billion, up 18% year over year, better than market expectations; earnings per share were $0.41, better than market expectations. However, for the second consecutive quarter, Airbnb provided lackluster guidance, indicating that travel spending growth will slow further until the peak summer travel season arrives. The stock fell about 7% in after-hours trading. Airbnb said in a letter to shareholders that second-quarter revenue will reach 2.68 billion to 2.74 billion US dollars. The analysts' estimate was $2.74 billion. In its statement, Airbnb blamed the early 2024 Easter holidays and exchange rate headwinds.
Arm (ARM.US) revenue for the fourth fiscal quarter was higher than expected, and the outlook for fiscal year 2025 is weak. Arm's total revenue for the fourth fiscal quarter was US$928 million, with analysts' expectations of US$880.4 million; expected revenue of US$875 million to US$925 million, analysts' expectations of US$868 million; projected revenue for the fiscal year 2025 of US$3.8 billion to US$4.1 billion, analysts expected US$4.01 billion; adjusted operating profit for the fourth fiscal quarter of US$391 million, analysts expected US$355.9 million; and expected earnings per share after fiscal quarter adjustments of 0.32 million US dollars -$0.36, analysts expect $0.31; adjusted earnings per share for fiscal year 2025 are expected to be $1.45-1.65, and analysts expect $1.53.
The US prosecution is rumored to be investigating suspected fraud in Tesla's (TSLA.US) autonomous driving propaganda. Three people familiar with the matter revealed that the US prosecution is investigating whether Tesla committed securities fraud and telecom fraud by misleading investors and consumers with the autonomous driving function of its electric vehicles. Although Tesla's Autopilot and FSD systems can assist the driver to steer, brake, and change lanes, they are not fully autonomous. Although Tesla warned drivers to always be ready to take over driving, the US Department of Justice is reviewing some of Tesla's and the company's CEO Musk's previous remarks, which suggest that Tesla cars can drive autonomously. US regulators have also been conducting independent investigations into hundreds of accidents involving Autopilot enabled Tesla cars, including fatal accidents, and prompted Tesla to carry out large-scale recalls. According to another source, the US Securities and Exchange Commission (SEC) is also investigating the driver-assistance system features Tesla stated to investors.