It seems that the markets have now incorporated the Fed’s policy, giving good visibility into its actions and giving the impression that control has been regained over the scenario. Within a few months, we went from “don’t be afraid, no rate hikes anytime soon” to “don’t be afraid, 50 basis point rate hikes are the norm”. But the new message is now clearly understood. The nervousness easing was also illustrated by the decline in the VIX volatility index and 10-year bond yields that not only retreated from their peaks, but moved less after the release of the minutes.
But let’s not get too excited. This reprogramming of investor expectations does not mean that all parts of the financial sphere have been fixed. Take corporate revenues, for example. The figures at the beginning of the year were in line with previous reporting periods: the companies exceeded analysts ’expectations. Expectations as usual are too low because the companies themselves are guiding them to the numbers they can surpass, just to reassure shareholders.
But since companies that began their fiscal year on Feb. 1 began releasing their results in Q1, things have changed. We’ve seen what this means for the U.S. retail industry: Walmart, Target and their peers have painted a complex picture of the future. Does this mean the situation got worse in April? maybe. In any case, technology stocks also don’t seem immune: last night, Nvidia and Snowflake (which also started their financial year on Feb. 1) showed some caution and were punished out of session.
Meanwhile, new data shows the number of Americans filing new claims for unemployment benefits fell more than expected last week, down 8,000 to a seasonally adjusted 210,000 for the week ended May 21. , the Labor Department said. Economists expect Reuters polled 215,000 applications.
However, we got confirmation today that the US economy contracted in the first quarter. The Commerce Department said gross domestic product fell at a 1.5 annualized rate in the second quarter, worse than the 1.4% rate of decline reported in April.
Highlights of today’s economy:
Three US statistics: weekly jobless claims, the second estimate of Q1 GDP and the University of Michigan consumer confidence index.
The dollar dropped slightly to EUR 0.9347. The ounce of gold fell to USD 1845. Oil remained stable along with North Sea Brent at USD 114.62 per barrel and US WTI light crude at USD 111.13. The yield on the US 10-year debt is at 2.75%, relatively stable. Bitcoin trades at around USD 29,000.
In the markets:
* Broadcom announced Thursday that it will buy cloud services provider VMware for $ 61 billion in a cash and stock deal to further diversify its business software operations.
* Twitter gained 5.6% in pre-market trading. Elon Musk announced Wednesday that he will increase his personal contribution to $ 6.25 billion for the purchase of the social network, completely reducing the share of margin loans backed by TESLA stock.
* Apple expects to maintain iPhone production levels at approximately 220 million units this year, Bloomberg reports, as China’s health restrictions, supply problems and declining demand continue which weighs on smartphone makers. Apple shares dropped 1% in pre-market trading.
* NVidia – The semiconductor maker released a lower -than -expected quarterly revenue forecast on Wednesday, citing slowing demand in the video game industry, supply chain issues and containment in China. The stock lost 5.5% in pre-market trading.
* Macy’s climbed 14.7% in premarket trading after raising its annual revenue forecast, as the department store chain benefited from strong demand for its high -margin clothing items.
* SouthWest Airlines raised its operating income guidance in its second quarter on the back of a demand recovery. The airline gained 1.3% in premarket trading.
* Alibaba reported quarterly revenue than expected in the market as increasing demand for some of its online shopping services in China offset the impact of strict measures against COVID in the country. The stock rose 3.6% before the opening.
* Alphabet – The British Competition and Markets Authority (CMA) on Thursday launched a second investigation into Google’s advertising practices, which are suspected of distorting competition and illegally favoring its own services.
* Baidu, China’s largest online search engine, gained 5.8 percent in premarket trading after reporting better-than-expected quarterly earnings on the strength of its cloud computing and artificial intelligence businesses.
* Medtronics, a medical device specialist, reported a 9% increase in quarterly revenue on Thursday.
Analyst recommendations:
- Advance Auto Parts: UBS adjusts the price target to $ 250 from $ 275, maintaining the buy rating.
- Ashtead: Jefferies remains Buy with target price reduced from GBp 8,000 to GBp 5,000.
- ASGN: Credit Suisse drops to poor performance from neutral, adjusting the price target to $ 90 from $ 110.
- Bakkavor: Berenberg maintains a hold rating with the target price reduced from GBp 125 to GBp 110.
- Best Buy: UBS adjusts the price target to $ 80 from $ 120, maintaining a neutral rating.
- Bodycote: Berenberg remains Buy with target price reduced from GBp 1030 to GBp 780.
- Farfetch: Credit Suisse adjusts the price target to $ 36 from $ 47, maintaining the better rating.
- FirstGroup: Berenberg starts tracking as a purchase, targeting GBp 150.
- Netease: UBS adjusts the price target to $ 124 from $ 131, maintaining the buy rating.
- Nordstrom: Credit Suisse adjusts the price target to $ 26 from $ 29, maintaining a neutral rating.
- Restaurant Brands International: Guggenheim lowered the price target to $ 55 from $ 63, maintaining a neutral rating.
- ServiceNow: UBS adjusts the price target to $ 570 from $ 625, maintaining the buy rating.
- Zoom Video Communications: Guggenheim lowered the price target to $ 130 from $ 160, maintaining the buy rating.