Your portfolios in brief
Founded in 1982, Electronic Arts Inc (EA) develops, markets, publishes and distributes games, content and services for game consoles, PCs, cell phones and tablets worldwide. EA is renowned for its games in a variety of genres, including sports, racing, first-person shooters, action, role-playing and simulation.
- Highlights in 2023
Results for the second quarter of fiscal 2024: EA posted excellent performances, thanks in particular to its sports franchises.
Adjusted operating margins and forecasts: Adjusted operating margin decreased to 26% from 28% last year, due to higher marketing and R&D expenses. EA maintains its forecast for fiscal 2024, with subscriptions of between $7.3 and $7.7 billion.
Growth and earnings: Q2 sales of $1.9 billion were stable year-on-year, but subscriptions were up 4%, boosted by the launch of FC24 and the continued growth of the Madden NFL and FIFA franchises.
-Why is this a stock to watch?
The strength of EA's franchises, its capacity for innovation and its robust financial performance make it an attractive stock. The successful transition to EA Sports 24 FC and the sustained growth of its flagship game franchises point to continued growth potential.
EA said that "FC 24", its first soccer game without the "FIFA" brand in nearly three decades, had more than 14.5 million active accounts in the first four weeks after launch.
The stock has accumulated gains of 13% over the past month, making it an attractive proposition. In addition, the company has benefited from its 2021 acquisitions of Playdemic, Codemasters, Metalhead Software and Glu Mobile, a trend that should continue in the short term. Electronic Arts forecasts revenues and bookings of between $7.3 and $7.7 billion in 2024.
Market Brief
Monday
-Stock markets end slightly lower
The New York Stock Exchange ended the session slightly down. After several weeks of gains, the market showed signs of running out of steam, but maintained a resilience that inspires optimism among investors. The indices closed as follows:
Dow Jones: -0.16%, ending the session at an unspecified level.
NASDAQ: -0.07%, also closing at an unspecified level.
S&P 500: -0.20%, ending the day at an undisclosed level.
- Stockss in brief
Shopify (+4.89%): The platform rose significantly after announcing record sales on Crazy Friday, with around $4.1 billion worth of items sold, marking a 22% year-on-year increase.
Affirm (+11.97%): This company specializing in deferred payment benefited from strong use of installments during Good Friday.
Amazon (+0.67%): The stock gained ground, coinciding with the annual AWS re:Invent conference, where new products related to its cloud computing subsidiary were presented.
Telecom Argentina (+11.63%), CAAP (+11.51%), and Banco Macro (+9.18%): These Wall Street-listed Argentine stocks had a banner day, continuing their ascent following the election of ultraliberal candidate Javier Milei.
Foot Locker (-0.90%): The company suffered a decline after Citigroup lowered its recommendation, citing concerns about economic conditions and excessive inventories.
-Analysis of the oil market situation and OPEC
The oil market fell steadily for a fourth consecutive day, as investors eagerly awaited the delayed OPEC+ meeting. Brent, the global benchmark, fell below $80 a barrel, continuing its longest run of declines since the end of 2021. This downward trend came at the same time as a slowdown in industrial company profits in China, the world's largest importer of crude oil, underlining the risks to economic growth.
The OPEC+ meeting, initially scheduled but postponed to take place by videoconference, promises to be tumultuous. Saudi Arabia, OPEC's leader, is facing internal disagreements over cutting oil production quotas. Although Riyadh is determined to support oil prices, which are considered too low, it is struggling to convince certain African countries, notably Angola and Nigeria, which are seeking to increase their production by 2024. These countries rely heavily on their oil and gas industries for foreign currency.
The fall in oil prices, which saw WTI drop by almost 21% and Brent by 18%, reflects a gloomy market mood. Concerns about the Chinese economy, mixed signals from Europe and the USA, and high interest rates weighing on growth, all contribute to this trend.
Tuesday
Dow Jones: The index rose by 0.24%, adding 83.51 points to close at 35,416.98.
S&P 500: The index edged up 0.10% to 4,554.89 points.
NASDAQ: The technology index gained 0.29%, closing at 14,281.76 points.
The stock market session saw a resumption of the November rally, spurred on by comments from a US Federal Reserve official, Christopher Waller. His statements raised hopes that the central bank might not need to raise interest rates further.
Waller's remarks, asserting that policy is "well positioned" to slow the economy and bring inflation down to 2%, came ahead of the Federal Open Market Committee meeting scheduled for December 12-13. Markets generally expect the Committee to hold its key rate steady.
-Stockss in brief
Walmart (+1.24%): Taking advantage of the Thanksgiving shopping season, Walmart saw its share price rise.
Home Depot (+0.80%): The DIY giant benefited from a small rebound in consumer confidence.
Best Buy (+2.35%): The electronics chain rose on the back of Cyber Monday sales.
Boeing (+1.40%): The stock climbed after a positive analysts' opinion.
Crocs (+5.13%): The company benefited from Crazy Friday purchases.
Affirm (+11.51%): The deferred payment specialist saw its share price soar thanks to the Good Friday promotions.
Tesla (+4.51%): The stock gained on increased registrations of its vehicles in China.
Wednesday
-S&P 500 on track for best month since July 2022
U.S. equities edged lower after the release of the Federal Reserve's Beige Book, which signaled easing labor conditions and weaker economic activity. Treasury yields were down, fueled by hopes of Federal Reserve rate cuts next year.
Dow Jones: The index edged up 0.04% to 35,430.42 points
NASDAQ: The index lost 0.16% to 14,258.49 points
S&P 500: The index slipped 0.09% to 4,550.58 points.
According to Dow Jones Market Data, the Dow was on track for a monthly gain of 7.4%, its best since October 2022. The S&P 500's 8.7% and the NASDAQ's 11.1% gains in November would be their best monthly gains since July 2022.
-Factors influencing markets
Stocks lost Tuesday's gains after the Fed's Beige Book survey showed mostly weaker economic activity and falling labor demand.
Nevertheless, the main stock market indices were on course for their best monthly gains since at least October 2022, as benchmark borrowing rates for the economy fell.
The 10-year Treasury yield, which had reached a 16-year peak just above 5% in October, slipped to 4.28% in Wednesday's trading, as investors increased bets that a slowdown in inflation would encourage the Fed to stop raising rates and even cut them in the coming months.
US economic growth in the third quarter was revised upwards to an annualized rate of 5.2%, above expectations of 5% and the previous estimate of 4.9%.
-Stockss in brief
General Motors (GM) (+9.38%): General Motors shone on the stock market with a significant rise of 9.38%, closing at $31.60. This performance is attributed to the announcement of a $10 billion share buyback plan and a 33% increase in its dividend, despite slightly lower-than-expected earnings projections for 2023.
GameStop (GME) (+20%): GameStop shares jumped over 20%, reaching $16.25. This spectacular rise comes a week before the company's earnings announcement, fuelling market speculation.
Foot Locker (+16%): Foot Locker shares rose by a notable 16%, as the company exceeded expectations for its third-quarter results and full-year forecasts.
Bank of America (+2.94%): Bank of America shares rose by 2.94%, seemingly benefiting from lower bond yields.
Citigroup (+1.98%): Citigroup also benefited from lower bond yields, with a 1.98% rise in its share price.
Thursday
-An exceptional month for indices
Dow Jones : The index rose 1.47% to close at 35,950.89 points.
NASDAQ: The index was down 0.23%, closing at 14,226.22 points.
S&P 500: The broad index gained 0.38% to close at 4,567.80 points.
This session marked the end of an exceptional month for Wall Street, with impressive monthly performances for all three indices. The Dow Jones closed November with an 8.9% gain, ending a run of three consecutive months of decline. The S&P 500 rose by 8.9% in November, while the NASDAQ gained 10.7%. Both indices recorded their best monthly performance since July 2022, and were within 1% of their respective 2023 highs.
Data released on Thursday morning revealed that the Personal Consumption Expenditures price index - the Federal Reserve's preferred inflation indicator - rose by 3.5% on an annual basis, marking a slowdown from the 3.7% annual increase seen the previous month.
These figures are part of a series of positive inflation data observed in November, leading investors to conclude that the Federal Reserve has probably completed its rate hike cycle and may even start lowering rates in 2024.
In November, technology stocks largely dominated the market, but investors trimmed their positions somewhat as the month drew to a close. Nvidia lost 2.9% on Thursday, but still ended the month up 14.7%. Tesla shares were down 1.7% on Thursday, despite an impressive 19.5% rebound in November. Alphabet and Meta lost 1.8% and 1.5% respectively on the day.
- Stockss in brief
Salesforce (9.35%): The customer relations software giant significantly raised its earnings guidance for the fourth quarter.
Snowflake (6.96%): Shares in this cloud storage firm surged after the publication of strong quarterly figures.
Ford (-2.93%): The automaker suffered a decline after acknowledging that the six-week strike cost it $1.7 billion.
ImmunoGen (82.75%): This biotech specializing in cancer treatment saw its shares soar following the announcement of its takeover by AbbVie Laboratories for $10.1 billion.
Phillips 66 (5.44%): The hydrocarbon delivery company continued to be sought-after, notably following a $1 billion equity investment by Elliott Investment Management.
- OPEC+ adjustments and impact on oil prices
OPEC+ has decided to cut production by 1 million barrels a day, in addition to Saudi Arabia's unilateral cut, to boost oil prices. The move, confirmed by OPEC+ delegates, was seen as voluntary, with quotas announced individually for each country.
West Texas Intermediate prices fell by over 2% to $75.96 a barrel, while Brent closed at $82.83 a barrel. Brazil's membership of OPEC+ from next year is seen as a potential strengthening of the cartel's influence.
However, despite these reductions, crude oil prices remain almost 20% below their 2023 peaks, due to fears of slowing demand and increasing supply. Analysts anticipate continued pressure on prices in the months ahead.
Friday
- Fed expectations
Dow Jones: The index edged up 0.1%.
NASDAQ: The index opened slightly down by 0.4%.
S&P 500: The index was down a modest 0.1% at the opening.
Investors were paying close attention to statements by Federal Reserve Chairman Jerome Powell, who will speak later this morning. November's sharp rise was partly due to investors' belief that the Fed had completed its rate hikes and might even begin to reduce them in the first half of next year. The Fed's next rate decision is scheduled for December 13.
- Canada's job market in November
In November, Canada's unemployment rate edged up to 5.8%, despite the addition of 25,000 jobs. This was partly due to population growth outstripping employment growth, reflecting a more difficult labour market. Manufacturing and construction recorded the strongest employment gains, while wholesale and retail trade and finance, insurance, real estate, rental and leasing saw the most job losses.
Quebec, in particular, failed to add jobs in November, with the unemployment rate rising from 4.9% to 5.2%. Nationally, the unemployment rate has risen by 0.1 percentage points since October, marking an upward trend since April. Young people aged 15 to 24 are particularly hard hit, with a 2% increase in their unemployment rate since April. Despite these trends, average hourly earnings continue to rise, with an increase of 4.8% in November, similar to October.
Conclusion
In summary, the month of November was marked by remarkable performances on the stock markets, with all three major indices recording significant gains close to their annual highs. This positive trend was underpinned by investor optimism regarding the potential end of the Federal Reserve's rate hike cycle and the possibility of rate cuts in 2024.
