Romain Fournier

Chief Editor
Having worked in the British, French and Swiss financial press, Romain is able to report on local and international issues, as comfortable in French as in the language of Shakespeare, Romain Fournier leads the editorial team at Marketscreener. Fine connoisseur of the English-speaking markets, Romain delivers an editorial every day on US and UK markets.

A roller-coaster week as Fed decision looms

01/25/2022 | 10:09am EDT
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Wall Street indexes were down sharply this morning, due to investors’ nerves about the situation in Ukraine and the US central bank rapidly ending its accommodative monetary policy implemented during the pandemic. After a two-day meeting, the Fed will take a decision tomorrow. Many quarterly earnings from tech giants are also due this week.

Yesterday, the S&P 500 index briefly fell into correction territory before reversing its course and ending in the green. The last-ditch effort of technology and cyclical stocks allowed the S&P500 to finish at +0.28% and the Nasdaq 100 to gain 0.49%. The Nasdaq 100 had lost nearly 5% at the worst of the session. That's quite a turnaround. The VIX volatility index made a small return to the 30 points, as in early December.

But today, the downward trend seems poised to continue. Only one thing is certain, the nervousness on markets has risen again and we have entered a fairly classic phase of increased uncertainty. The S&P is on track for its worst January performance since 2009, and the second-worst since 1970.

In the very short term, it is the US central bank's decision on Wednesday on its monetary policy that is causing a stir. CME's FedWatch tool predicts that the Fed will raise rates by a quarter point for the first time after its March 15-16 meeting. The January 25-26 meeting is just supposed to set the stage. Very few economists are expecting stronger action tomorrow. But that doesn't stop rumors from circulating. Some contrarians are calling for a strong and unexpected action, as opposed to the predictable monetary policy of the last few years, which would send a strong message in the fight against inflation. Others are urging the central bank to back off on the grounds that it risks derailing equity markets. Should the Fed back off because stocks are falling apart? Of course not, that is not its job, despite appearances.

 

Economic highlights of the day:

Today, data includes the FHFA house price index for November,  the Conference Board consumer confidence index for January  and the Richmond Fed manufacturing index for January.

The dollar is up to EUR 0.8874. The ounce of gold is trading at USD 1839. Oil is down at USD 86.56 for Brent and USD 83.32 for WTI. The T-Bond is yielding 1.75% over 10 years (-1 points), while the Bund is at -0.11% (-4 points). Bitcoin is trading at USD 36,800.

 

On markets:

* International Business Machines - The U.S. computer giant reported Monday a profit and revenue above expectations for the fourth quarter, the group's focus on cloud computing is beginning to bear fruit. The share price is up 2.5% in pre-market trading.

* Nvidia - The U.S. manufacturer of semiconductors is about to abandon its plan to buy $ 40 billion of Arm, a subsidiary of SoftBank Group, reports Tuesday the agency Bloomberg, citing sources close to the case.

* Tesla - Tesla, which is being sued by JPMorgan for $162.2 million over a bond contract, accused the bank on Monday of "bad faith and greed".

* General Electric - The industrial conglomerate said Tuesday it expects its earnings and cash flow to rise this year after reporting better-than-expected results for the last three months of 2021.

* American Express - The payment specialist reported quarterly earnings Tuesday that beat Wall Street expectations on the back of a record jump in spending on its credit cards. 

* Verizon Communications - The telecommunications company said Tuesday it gained 558,000 new mobile subscribers in the fourth quarter, up from 548,000 expected by research firm FactSet, thanks to the rapid deployment of its fifth-generation services.

* 3M - The U.S. conglomerate reported Tuesday quarterly sales up 0.3% but profit fell 4.7% due to supply chain bottlenecks, higher raw material costs and semiconductor shortages. The stock gained 1.7% in pre-market trading.

* Johnson & Johnson - The drugmaker reported lower-than-expected fourth-quarter sales on Tuesday but said it expects a 46% jump in sales of its COVID-19 vaccine this year, which could represent $3.5 billion in revenue. 

* Microsoft and Texas Instruments will release their quarterly results after the close of the New York Stock Exchange.

* Meta Platforms - Facebook's parent company announced Monday that it has developed a supercomputer with a new artificial intelligence (AI) that is touted as the fastest in the world.

* The U.S. Food and Drug Administration (FDA) on Monday limited the use of antibody-based COVID-19 treatments developed by Regeneron and Eli Lilly, saying they could not be used anywhere in the U.S. because they are likely ineffective against the Omicron variant of the coronavirus.

* Walmex, Walmart's Mexican subsidiary, said Monday it is considering "strategic alternatives" for its Central American operations, including a divestiture or joint venture.

 

Analyst recommendations:

  • AbbVie: Morgan Stanley adjusts price target to $142 from $124, keeps overweight rating
  • Ares management: Piper Sandler initiated coverage with a recommendation of overweight. PT up 34% to $97
  • Cognex: Daiwa Securities upgrades to outperform from neutral. PT up 11% to $75
  • Eli Lilly: Morgan Stanley adjusts price target to $272 from $275, keeps overweight rating
  • Fox Corporation: UBS upgrades to buy from neutral, adjusts price target to $50 from $42
  • Johnson & Johnson: Morgan Stanley adjusts price target to $175 from $187, keeps equalweight rating
  • Kohl's Corporation: Cowen adjusts price target to $75 from $73, maintains outperform rating
  • Marathon Petroleum: Piper Sandler downgrades to neutral from overweight. PT up 8% to $76
  • Medtronic: Needham lowers price target to $128 from $131, keeps buy rating
  • PBF Energy: Piper Sandler upgrades to overweight from neutral. PT up 32% to $21
  • PPG Industries: DA Davidson lowers price target to $191 from $195, maintains buy rating
  • M&T Bank Corporation: UBS adjusts price target to $210 from $212, maintains buy rating
  • Regions Financial Corporation: UBS adjusts price target to $30 from $32, maintains buy rating
  • Sierra Bancorp: Keefe, Bruyette & Woods reinstated coverage with a recommendation of outperform. PT up 23% to $33
  • Snowflake: Loop Capital Markets upgrades to buy from hold. PT up 33% to $370
  • Standard Chartered: Jefferies remains Buy with a price target raised from GBp 794 to 855.
  • S&P Global: UBS adjusts  price target to $518 from $530, maintains buy rating
  • Twilio: Atlantic Equities initiated coverage with a recommendation of overweight. PT set to $240
  • United Airlines: UBS adjusts price target to $53 from $58, maintains buy rating
  • Verizon Communications: Deutsche Bank lifts price target to $57 from $56, maintains hold rating
  • WPP: Oddo BHF downgrades from Outperform to Neutral with a target of GBp 1240.

© MarketScreener.com 2022
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Stocks mentioned in the article
ChangeLast1st jan.
ABBVIE INC. -0.38% 150 Delayed Quote.10.78%
AMERICAN EXPRESS COMPANY 2.56% 169.6 Delayed Quote.1.08%
ARES MANAGEMENT CORPORATION 3.19% 72.71 Delayed Quote.-10.53%
AUSTRALIAN DOLLAR / US DOLLAR (AUD/USD) 0.87% 0.716 Delayed Quote.-2.23%
BITCOIN (BTC/EUR) -2.08% 26643.4 End-of-day quote.-36.61%
BITCOIN (BTC/USD) -2.09% 28578 End-of-day quote.-40.13%
BRITISH POUND / US DOLLAR (GBP/USD) 0.09% 1.26275 Delayed Quote.-6.75%
CANADIAN DOLLAR / US DOLLAR (CAD/USD) 0.33% 0.7853 Delayed Quote.-1.03%
COGNEX CORPORATION 6.80% 49.3 Delayed Quote.-36.60%
DAIWA SECURITIES GROUP INC. 1.30% 623.9 Delayed Quote.-5.06%
DEUTSCHE BANK AG -0.21% 10.392 Delayed Quote.-5.68%
ELI LILLY AND COMPANY 3.20% 323.48 Delayed Quote.17.11%
EURO / US DOLLAR (EUR/USD) -0.01% 1.07317 Delayed Quote.-5.61%
FOX CORPORATION 2.66% 35.46 Delayed Quote.-3.90%
GENERAL ELECTRIC COMPANY 2.27% 78.76 Delayed Quote.-16.63%
INDIAN RUPEE / US DOLLAR (INR/USD) 0.05% 0.012892 Delayed Quote.-4.10%
INTERNATIONAL BUSINESS MACHINES CORPORATION 1.74% 139.27 Delayed Quote.4.20%
JOHNSON & JOHNSON 0.91% 181.09 Delayed Quote.5.86%
KOHL'S CORPORATION -3.06% 41.87 Delayed Quote.-12.55%
LONDON BRENT OIL 1.52% 119.2 Delayed Quote.46.84%
M&T BANK CORPORATION 1.72% 180.8 Delayed Quote.15.74%
MARATHON PETROLEUM CORPORATION 2.63% 102.1 Delayed Quote.59.56%
MEDTRONIC PLC -0.36% 99.08 Delayed Quote.-4.22%
META PLATFORMS, INC. 1.83% 195.13 Delayed Quote.-41.99%
MICROSOFT CORPORATION 2.76% 273.24 Delayed Quote.-18.76%
MORGAN STANLEY 1.71% 86.45 Delayed Quote.-11.93%
NASDAQ 100 3.30% 12681.42 Real-time Quote.-24.77%
NASDAQ COMP. 3.33% 12131.13 Real-time Quote.-24.96%
NEW ZEALAND DOLLAR / US DOLLAR (NZD/USD) 0.83% 0.6534 Delayed Quote.-5.22%
NVIDIA CORPORATION 5.38% 188.11 Delayed Quote.-36.04%
PBF ENERGY INC. 5.07% 32.94 Delayed Quote.153.97%
PIPER SANDLER COMPANIES 2.61% 131.51 Delayed Quote.-26.33%
PPG INDUSTRIES, INC. 2.95% 130.03 Delayed Quote.-24.59%
REGENERON PHARMACEUTICALS, INC. 1.37% 692.8 Delayed Quote.9.70%
REGIONS FINANCIAL CORPORATION 1.25% 21.88 Delayed Quote.0.37%
S&P 500 2.47% 4158.24 Real-time Quote.-14.86%
S&P GLOBAL, INC. 2.32% 360.64 Delayed Quote.-25.31%
S&P GSCI CRUDE OIL INDEX 0.86% 630.6586 Real-time Quote.51.70%
SIERRA BANCORP 0.83% 21.78 Delayed Quote.-20.44%
SNOWFLAKE INC. 2.45% 129.91 Delayed Quote.-62.57%
SOFTBANK GROUP CORP. 3.43% 5341 Delayed Quote.-4.97%
STANDARD CHARTERED PLC 0.51% 627 Delayed Quote.39.83%
TESLA, INC. 7.33% 759.63 Delayed Quote.-33.03%
TEXAS INSTRUMENTS 2.21% 177.97 Delayed Quote.-5.57%
TWILIO INC. 7.49% 108.37 Delayed Quote.-58.85%
UBS GROUP AG 1.35% 17.985 Delayed Quote.8.07%
UNITED AIRLINES HOLDINGS, INC. 5.08% 48.41 Delayed Quote.10.58%
VERIZON COMMUNICATIONS 0.80% 51.4 Delayed Quote.-1.87%
WALMART INC. 1.97% 128.48 Delayed Quote.-12.92%
WISDOMTREE CLOUD COMPUTING UCITS ETF - ACC - USD 3.35% 30.115 Delayed Quote.-41.86%
WPP PLC 0.78% 926.4 Delayed Quote.-17.25%
WTI 0.94% 115.083 Delayed Quote.46.90%
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