Despite the rise in consumer prices, investors wanted to hear Jerome Powell say that the Federal Reserve will not raise rates anytime soon. It seems their prayers were answered as that is pretty much what happened. Jerome Powell explained that the Fed will keep rates low even though inflation could be higher and more persistent than expected. The central banker is changing his mind about the trajectory of US inflation even though he still insists that the rise in prices will remain transitory in the medium term. He also said the Fed will adjust its strategy if and only if inflation exceeds its target in a "sustained and significant" way, which is almost like saying never. Put another way, the Federal Reserve is not about to move a finger on rates and is just beginning to think about how securities purchases might be modified. In any case, it will communicate well in advance about the timing of tapering. The prospect of central banks continuing to irrigate economies is enough to keep markets happy.
On the macroeconomic front, the focus is on economic indicators. Today was released the first estimate of U.S. GDP for the second quarter. It grew at a 6.5% annualized rate, the Commerce Department said. Economists polled by Reuters had forecast GDP rising at an 8.5% rate. Meanwhile, Jobless claims dropped by 24,000 to 400,000 last week, the Labor Department reports.
On the corporate side, the results keep coming: Q2 is better than expected and activity is returning to or exceeding 2019 levels. It looks like most companies have moved on from coronavirus, which seems paradoxical as the spread of the virus accelerates once again with the Delta variant. But no matter how strange it may seem, it is enough to drive stock prices to new highs, especially in the US, where Wall Street is reaching records every day.
Economic highlights of the day:
Main indicators: German unemployment figures for April, the first estimate of US GDP for Q2 2021, new weekly jobless claims and March housing sales.
The dollar is down to EUR 0.8422, while gold is regaining some height, near USD 1,825 an ounce. Oil is rising, with Brent crude at USD 75.16 and WTI at USD 72.8. The yield on US debt did not change much after the Fed, as it still stands at 1.24% over 10 years. Bitcoin is hovering around the USD 40,000 mark.
* Facebook said Wednesday it expects revenue growth to decelerate significantly in the third and fourth quarters, sending its stock down about 3.5 percent in trading before the Wall Street opening.
* Qualcomm said Wednesday it expects sales of its 5G phone chips this year to rise to $10 billion from $6 billion in the previous year, as the group managed to ease its supply problems amid a global semiconductor shortage. The stock is up 2.8% in pre-market trading.
* Ford Motor raised its full-year profit forecast on Wednesday after reporting better-than-expected quarterly results, sending the stock up nearly 5% in premarket trading.
* Amazon releases its results after the close of the New York Stock Exchange. The U.S. online retail giant also signed power purchase agreements with TotalEnergies for a commitment of 474 megawatts of renewable generation capacity in the United States and Europe.
* Comcast on Thursday reported second-quarter revenue ahead of Wall Street expectations on the back of a rebound in advertising sales and a reopening of theme parks, which were affected by the COVID-19 pandemic. The stock is up 2.4% in pre-market trading.
* Merck & Co reported on Thursday adjusted earnings in line with expectations, which came in at $1.31 per share for the quarter ended June. The stock is up 0.7% in premarket trading.
* Mastercard reported results before the opening of the New York Stock Exchange.
* Uber Technologies - Japanese conglomerate SoftBank has sold about 45 million of its shares in the U.S. VTC giant, a source close to the matter told Reuters on Wednesday. Uber shares were down 4.6 percent in after-hours trading.
* The Boeing Company - Airbus took on one of its U.S. rival's most profitable businesses on Thursday by announcing the launch of a cargo version of its A350 commercial jet, betting that the boom in Internet commerce during the pandemic would be more than a flash in the pan.
* Didi Global - The Chinese group, targeted by the Beijing authorities who have notably requested earlier this month the removal of its VTC software from the application stores, is considering withdrawing from the New York Stock Exchange, reports Thursday the Wall Street Journal. Didi, however, denied considering such a plan. The stock, which was soaring 47.7% with about 4.5 million shares traded, trimmed its gains to 14.5% in pre-market trading.
- Barclays: Goldman Sachs raises its target from GBp 270 to 280.
- DTE Energy Company : Spin-Off Research downgrades to hold from buy, adjusts price target to $126 from $125
- Facebook: JP Morgan keeps Buy rating. The target price has been raised from USD 390 to USD 450.
- McDonald's: Goldman Sachs, Buy, adjusts target to $275 from $267.
- Manhattan Associates : Baird adjusts pt to $160 from $145, maintains outperform rating
- Microsoft : JPMorgan adjusts price target to $310 from $300, reiterates overweight rating
- Mitchells & Butlers: Peel Hunt raised the recommendation to buy from hold. PT up to 335 pence
- Paypal: KeyBanc maintains its "overweight" rating and raises its price target from USD 310 to USD 335.
- Pennon: HSBC cut the recommendation to reduce from hold. PT down 7.4% to 1,160 pence
- Rio Tinto: JP Morgan is Buy but lowers its target from GBp 8250 to GBp 7770.
- Segro: Peel Hunt cut the recommendation to hold from add. PT down 1.6% to 1,175 pence.
- Shopify : Stifel adjusts price target to $1,650 from $1,600, reiterates buy rating
- Stanley Black & Decker : Morgan Stanley adjusts price target to $234 from $230, maintains overweight rating
- Starbucks : DA Davidson adjusts pt to $135 from $120, maintains buy rating
- Tesla: DZ Bank moves from sell to buy.
- Wizz Air: HSBC downgrades its advice to light with a target of GBp 4100.