In Q2, GDP fell 0.9% year-on-year, which is a 0.2% fall from the previous quarter. It comes after the US economy shrank by 1.6% in Q1.
However, the US is not officially in a recession, since it's the National Bureau of Economic Research, a nonprofit group of economists, that decides if the country is in one. And their definition of a recession is broader: it says it is "a significant decline in economic activity that is spread across the economy and lasts more than a few months." It takes many more factors in account that just the GDP data.
At the moment, the job market is still resilient, and personal consumption grew by 1%. The United States is not currently in a recession or in a "pre-recession," the White House even said on Wednesday.
Yesterday, the Fed unveiled a 0.75% rate hike. Investors believe they detected the beginning of a softening of the Fed's tone, which fueled a powerful rebound in risk assets. The S&P500 closed up 2.62% and the Nasdaq 100 gained 4.26%.
Overall, the central bank has raised its rate by 225 basis points since the beginning of the year. This is huge, but it is what investors had anticipated.
Each rate hike is supposed to bring the Fed closer to the moment when it will stop raising rates. And yesterday, in his speech, Jerome Powell seems to have indicated that the FOMC was going towards a slightly less aggressive strategy. The market thinks that the current consensus rate cap may be a bit too high and that the Fed won't go that far. It's subtle and fragile, but that's what fueled the rebound. After winter, must come spring. However, some believe that Jay Powell's words might have been over-interpreted, as often happens.
Meanwhile, corporate earnings are piling up, with some good and some not so good news. Ford did really well, while Meta Platforms disappointed. There are big disparities in performance between companies, sometimes even within the same sector. The current period of cost pressures is a powerful indicator of business models and corporate agility. But it's still a little early to make a meaningful assessment.
Economic highlights of the day:
The dollar is up to EUR 0.9855. The ounce of gold rose to USD 1751. North Sea Brent is trading at USD 106.64 a barrel and US WTI light crude at USD 97.17. The yield on 10-year US debt is paying 2.79%, still below the 5-year, 2-year and 6-month. Bitcoin is at USD 22885.
* Meta Platforms announced gloomy forecasts on Wednesday evening after reporting a drop in quarterly revenue for the first time, amid the threat of a global recession and increased competitive pressure on its advertising sales. Facebook's parent company's stock was down 5.2% in after-hours trading.
* Qualcomm expects fourth-quarter revenue to fall short of market expectations due to an expected slowdown in the economy and demand for smartphones. The semiconductor maker's stock was down 3.9% before the open.
* Mastercard reported a jump in second-quarter profit as increased cross-border spending driven by a strong recovery in foreign travel more than offset higher costs.
* Pfizer reported 78% growth in quarterly profit and reaffirmed sales guidance of $54 billion in 2022 for its COVID-19 vaccine and oral treatment. The stock is up 1.8% in pre-market trading.
* Merck reported higher-than-expected second-quarter profit and revenue, thanks to strong sales of its Keytruda cancer treatment.
* Ford on Wednesday reported better-than-expected second-quarter net income and confirmed its earnings outlook for the year, adding that it is "actively considering" ways to offset rising costs. The carmaker's stock was up more than 5% in premarket trading.
* Hershey raised its annual forecast for adjusted earnings and sales growth.
* Linde raised its full-year profit forecast thanks to higher prices despite a difficult environment and its withdrawal from the Russian market.
* Carlyle reported a 34% increase in second quarter distributable earnings due to asset disposals.
* Southwest was down 5% in premarket trading after reporting quarterly results.
* Spirit on Thursday accepted a $3.8 billion bid from rival JetBlue, a deal that will create the fifth-largest U.S. airline. Spirit's stock rose 4 percent in premarket trading and Jetblue's 1.1 percent.
* Valero announced on Thursday a jump in its second quarter profit. The refiner's stock is up 4% in premarket trading.
* Altria - The maker of Marlboro cigarettes lowered the valuation of its 35% stake in e-cigarette maker Juul Labs to $450 million from $1.6 billion at the end of March and $12.8 billion in 2018.
* Comcast said subscriber growth in its broadband and streaming business in the second quarter was flat, sending the stock down about 6% in pre-market trading.
* Royal Caribbean reported second-quarter revenue of 2.18 billion euros, beating analysts' estimates of 2.11 billion euros.
* Best Buy - The electronics retailer issued a warning on its annual results due to a decline in customer spending with inflation.
* Rivian Automotive, maker of electric trucks, announced Wednesday a 6% reduction in its workforce to optimize costs in a tougher macroeconomic environment.
- Albertsons: UBS cut the target and maintains neutral rating. PT up 9.4%.
- Best Buy: Jefferies downgrades to hold from buy. PT down 4.7% to $71.
- Boston Properties: Piper Sandler moves to neutral from overweight. PT up 11% to $100.
- Boyd Gaming: KeyBanc adjusts price target to $70 from $78. Kepps overweight rating.
- CMC Markets: Numis Securities downgrades to hold from add. PT down 5.8% to 290 pence.
- Cognizant Technology Solutions: J.P. Morgan cut the recommendation to neutral from overweight. PT up 9.5% to $77.
- Five Below: MKM Partners starts at neutral with $115 price target.
- General Motors: Wedbush downgrades price target to $42 from $50. Maintains outperform rating.
- Kimberly-Clark: Barclays maintains equal-weight rating. PT down to $124 from $134.
- News Corporation: Macquarie cut the recommendation to neutral from outperform. PT up 24% to $21.10.
- Schlumberger: Benchmark Company LLC raised the recommendation to buy from hold. PT up 54% to $55.
- Semtech: Benchmark Company LLC initiated coverage with a recommendation of buy. PT up 36% to $81.
- The Sherwin-Williams Co: KeyBanc Capital Markets cut the target to $290 from $335. Maintains overweight rating.
- Strategic Education: Barrington Research lifts price target to $85 from $75. Outperform rating kept
- Stryker: Piper Sandler maintains overweight rating. PT up 22% to $250.
- SVB Financial Group: UBS cut the target to $430 from $625. Maintains neutral rating.
- Tractor Supply: MKM Partners initiated coverage with a recommendation of buy. PT up 23% to $230.
- Universal Health Services: RBC Capital Markets maintains sector perform rating. PT up 4.2% to $114.
- Visa: RBC Capital Markets cut the target to $262 from $278 Maintains outperform rating.