The market the day before
On January 7, trading on American stock exchanges again ended with a correction of indices. The S&P 500 dropped by 0.41% to 4,677 points, the Nasdaq lost 0.96%, the Dow Jones adjusted by only 0.01%. The energy sector (+1.45%) and finance (+1.15%) showed positive dynamics. Producers of cyclical consumer goods (-1.65%) and IT companies (-1.01%) looked worse than the market, as the most sensitive to the growth of US government bond yields.
Company news
- Absci Corporation (ABSI: +17.10%) announced a partnership with Merck. The deal could provide the company with additional revenue of up to $610 million due to commissions and payments.
- GameStop (GME: +7.3%) plans to launch an NFT marketplace and establish partnerships with a number of crypto companies.
- The New York Times (NYT: -10.7%) will acquire The Athletic online sports media for $550 million, which will allow the company to increase its subscriber base to 10 million by 2025.
Expectations
Today, the focus of investors' attention is on employment statistics. Data from the US Department of Labor for December showed an increase in the number of jobs in the non-agricultural sector by 199 thousand, which was significantly lower than the consensus forecast of 400 thousand. At the same time, manufacturing and construction companies reported an increase in the number of newly hired employees. Thus, the problems of labor shortage are gradually being resolved, which allows companies to increase production capacity. In addition, the unemployment rate in the country fell from 4.2% in November to 3.9% in December, exceeding economists' expectations and reaching the lowest level since February 2020.
At the same time, the average hourly wage for the month increased by 0.6%, which was the largest increase since April. Thus, on an annualized basis, this indicator increased by 4.7%. According to the published minutes of the last Fed meeting, the majority of FOMC members concluded that the US economy is close to the level of maximum employment. The continuation of wage growth, in turn, is a signal for new actions to curb inflation and confirms expectations of a key rate hike in March-May, as well as the likelihood of an earlier start to reduce the Fed's balance sheet.
- Stock exchanges in Southeast Asia ended trading in different directions. China's CSI 300 rose 0.44%, Hong Kong's Hang Seng rose 1.08%. Trading on the Tokyo Stock Exchange is closed today due to the holidays. The index of the Australian stock exchange ASX fell by 0.11%. EuroStoxx 50 has added 0.04% since the opening of the session.
- Brent crude futures are adjusted to $81.75 per barrel. Gold is trading at $1,797 per troy ounce.
In our opinion, the S&P 500 will hold the upcoming session in the range of 4635-4685 points.
Macrostatistics
The final data on wholesale stocks for November will be published today. The forecast assumes that the indicator will remain at the level of 1.2%.
Technical picture
The S&P 500 continues to move towards the lower boundary of the ascending channel. The RSI dropped below 50 points, the dynamics of the indicator indicates the development of a sideways trend. The transition of the MACD to the negative zone creates an additional risk for buyers, the correction may continue. The nearest support level for the broad market index is at the level of 4600 points.
In sight
On January 13, TSMC, the world's largest contract manufacturer of semiconductor elements, will report for the fourth quarter. According to the consensus of analysts from Factset, the company's revenue in the period under review will grow by 21% to $15.64 billion, and adjusted diluted EPS will increase by 13.6% to $1.12. According to preliminary data from the issuer, sales for the quarter increased by 21% YoY. The increase in revenue is still supported by the following factors: increased demand for mobile solutions (it will remain a positive driver over the next few years), the growth of the cloud computing segment, the continued strong dynamics of demand for client products (CPU, GPU for PCs and laptops), as well as solutions in the IoT and automotive product segments. According to SIA, in November last year, the semiconductor industry showed strong performance: sales grew by 23.5% YoY, with double-digit growth rates recorded in all key regions. After the publication of the quarterly report, business growth estimates for the full year 2022 (Factset consensus forecast: +20%), as well as forecasts on marginality of operations, will be of particular interest to market participants. In addition, investors are interested in more detailed information about the timing of the launch of solutions based on 3-nm: previously, publications appeared in the media about postponing the launch date by three months, whereas initially TSMC planned to start mass production in the fourth quarter of 2022. Another important item on the agenda will be data on the investment program abroad. In general, we maintain a bullish view of the company. The target price for TSMC paper is $136, the recommendation is "buy".
Also on January 13, the quarterly report will be presented by Delta Air Lines, Inc. (DAL) — one of the largest US air carriers with a market share of about 15%. The consensus forecast assumes that the company's revenue will be $8.856 billion (+123% YoY) with EPS of $0.13 (+95% YoY). Such a significant increase in indicators is due to the effect of a low base: in 2020, airlines faced unprecedented difficulties and restrictions caused by the pandemic. In particular, then revenue per available passenger mile fell by 53%. Today, air transportation is actively recovering, despite local difficulties associated with a shortage of personnel.
On January 14, the largest American bank JPMorgan Chase & Co. (JPM) will release a report for the fourth quarter. According to the forecast of FactSet, the revenue of the credit institution will reach $29.82 billion (-1% YoY). Earnings per share (EPS) may be $3.00, which is lower than last year's result ($3.79). At the same time, according to the results of the full fiscal year 2021, EPS may increase by 69% YoY, to $15.03, with a slight increase in revenue to $123.11 billion after $122.98 billion last year. In 2021, the increase in the bank's net profit was mainly due to the release of reserves to cover possible loan losses, which, however, is not a permanent source of income, but may contribute to positive profit dynamics in the medium term. The drivers of JPM's growth can also be attributed to the increase in commissions for investment banking services against the background of high activity in the M&A sector. JPMorgan has maintained its position as the second largest provider of mergers and acquisitions consulting services after Goldman Sachs.