Wall Street solidly up, with investors focusing on some positive US quarterly results, which particularly concern the technology sector. At 14.02 Italian time, the Dow Jones rose by 0.23%; the S&P 500 marks a growth of 0.44% while the Nasdaq advances by 0.89%. At about 4 pm Italian time, the Dow Jones rose by more than 175 points (+0.54%) to 33,221 points; the S&P 500 marks a progress of 0.55%, the Nasdaq also rises by about half a percentage point.
Among the stocks, the boom in purchases of the shares of the Chinese e-commerce giant Alibaba stood out in the premarket, shooting up to almost +6%. At the start of the session on Wall Street, Alibaba’s ADRs flared up, recording an increase of around 2.2%.
The Chinese-made giant announced that it closed its third fiscal quarter, covering the period between October and December 2022, with revenues of 247.76 billion yuan (the equivalent of $35.92 billion), higher of the 245.18 billion yuan expected by analysts polled by Refinitiv, and up 2% year-on-year.
Alibaba’s ADR profit was 19.26 yuan, much better than the estimated 16.26 yuan and up 14% year on year.
Alibaba’s combined net profit amounted to 46.82 billion yuan, up 69% year on year.
On the other hand, strong purchases remain on Nvidia stock, which jumps by more than +14%, after the chip maker announced a quarterly report that beat analysts’ outlook. Since the beginning of the year, Nvidia has recorded the best performance within the Philadelphia Stock Exchange Semiconductor Index, with an increase of 42% (vs. +14% for the semiconductor index).
The Californian company has thus returned to being the most capitalized chip maker in the world, with a market cap of 510 billion dollars.
On the quarterly front, however, bad news is also arriving, with the release of the financial results of the US pizza chains, Domino’s Pizza and Papa John’s. Pizza crisis in the States?
Yes, with inflation continuing to outrun Jerome Powell’s Fed expectations.
Both US-made pizza chains have recently raised their prices to deal with the increase
of labour, transport and food costs.
Domino’s fell short of analyst estimates for its US comparative sales and revenue. The stock also suffers from the group’s decision to revise its outlook downwards.
To be precise, Domino’s reported a turnover of $1.39 in the fourth quarter of 2022, lower than the $1.44 expected by the consensus of analysts interviewed by Refinitiv. Adjusted EPS came in better than expected at $3.97 versus the prior $3.94.
However, the Michigan-based group’s US comparative sales rose just 0.9%, far below the 3.4% increase expected by StreetAccount. Domino’s also cut its forecast of sales over the next 2-3 years to a 4% to 8% growth rate, versus previous forecasts of an increase of 6% to 10%. Domino’s slips more than 10%, Papa’s Johns loses more than 6%.
Papa’s Johns, another famous pizzeria chain in the USA, instead reported a turnover of
$526.2 million, higher than the expected $523.8 million. Adjusted EPS also beat forecasts, coming in at $0.71, above the $0.66 expected. But the group underperformed expectations on North American restaurant sales, posting revenue of $172.2 million, lower than the $172.7 million expected by StreetAccount.
Speaking of US inflation, the minutes of the Fed led by Jerome Powell were released yesterday on the macro front, relating to the last meeting of the FOMC on January 31-February 1, which ended with the announcement of an increase in US interest rates by 25 basis points, to the new range of between 4.5% and 4.75%, a record since October 2007.
From the minutes it emerged that “the risks on the inflation outlook point upwards”. Such risks include the “reopening of the Chinese economy” following the abandonment of China’s Zero Covid policy” and the “war in Ukraine”.
Not only. At the last meeting of the FOMC in early February “some exponents were in favor of a tightening of 50 basis points”, therefore more aggressive than the 25 points approved by Powell & Co.
Above all, US Treasury rates are pricing a more hawkish Fed: in particular, 10-year Treasury rates have risen to 3.951% in the last few hours, while two-year Treasury rates have jumped to 4.712%. However, yields are now pointing to the downside: 10-year Treasury rates are down to around 3.905%, while two-year yields are down slightly to 4.696%.