After last week’s big selloff on renewed rate hike fears, investors looked for bargains yesterday and it seems like today might be the same, with the main three Wall Street indices slightly up in pre-market trading.

After Friday’s stronger-than-expected PCE data, investors have started to consider the possibility of a 50 bps rate hike in March, instead of 25, with the odds at about 25%, according to the CME FedWatch tool.  Fed fund futures sees rates peaking at 5.4% by September, up from 4.57% now.

BofA Global Research even believes the Fed may hike interest rates to nearly 6%: "Aggregate demand needs to weaken significantly for inflation to return to the Fed's target. Further supply-chain normalization and a slowdown in the labor market will help, but only to a degree," said BofA in a note. "Moreover, these processes are taking longer than we and markets were expecting."

Yesterday, the session started well but ended lower. The Nasdaq 100 still held on to 0.7% gains, but the S&P500 and the Dow Jones were limited to 0.2 / 0.3%. This did not prevent Elon Musk from regaining his place as the richest man in the world in the Bloomberg ranking of billionaires. He is credited with $187 billion compared to $185 billion for LVMH head Bernard Arnault. The ranking changes with the rise and fall of LVMH and Tesla, as the competition is left behind: that big loser Jeff Bezos only reaches $117 billion. But enough of the billionaire's ramblings. Wall Street has had a little trouble keeping up, even if the appetite for risky assets has recovered a little. In Europe, the good behavior of indices was also favored by the announcement of a Northern Ireland trading deal between the EU and the UK.

Behind the rise in equity markets, the backdrop has not changed much. U.S. bond yields are still being stretched by uncertainty about the path of rates. All in all, the two statistics released yesterday did not do much to advance the debate. Housing data was surprisingly strong, while the durable goods orders numbers faltered. Experts are still struggling to quantify the impact of the "January effect" on these data. Investors will be closely looking at the Conference Board's U.S. Consumer Confidence Index, released at 10:00 am ET today. There will also be real estate prices and activity indexes.


Economic highlights of the day:

France and Spain’s February inflation figures, wholesale inventories, the FHFA house price index, the Chicago PMI,  the Conference Board's consumer confidence index and the Richmond Fed's index are today’s main events. All the agenda is here. This morning, Japan reported a sharper than expected contraction in industrial production of -4.6% in January.

The dollar is flat against the euro at EUR 0.9419 and down 0.4% against the pound at GBP 0.8255. The ounce of gold is down slightly to 1809 dollars. Oil remains firm, with North Sea Brent at USD 83.73 per barrel and U.S. WTI light crude at USD 77.60. The yield on 10-year US debt loses a point to 3.93%. Bitcoin is trading around 23,400 dollars.


In corporate news:

* Chevron on Tuesday raised its share buyback target to between $10 billion and $20 billion a year and confirmed its production forecast, up more than 3% a year by 2027. The oil giant was up 1.3% in pre-market trading.

* Target gained more than 2% in premarket trading after posting unexpected sales growth in the last three months of 2022, with the retailer pointing to the effect of promotions in its North American stores.

* Zoom Video was up 6.6% in pre-market trading after it reported a better-than-expected annual profit forecast thanks in part to cost reductions.

* Tesla - Elon Musk, the CEO of Tesla and Twitter, has contacted artificial intelligence researchers in recent weeks to develop an alternative to OpenAI's chatbot ChatGPT, The Information reported Monday, citing sources with direct knowledge of the matter.

* Apple - The U.S. company's Indian supplier, Foxlink, will be unable to fully resume operations for two months following a major fire, raising concerns about supplies to the iPhone maker, a source with direct knowledge of the matter told Reuters on Tuesday.

* Boeing said on Tuesday that its MQ-28 drone, developed in collaboration with the Royal Australian Air Force, could meet the U.S. Air Force's collaborative combat aircraft (CCA) requirements and is designed to fit into a fleet of manned fighter jets, which could include the Lockheed Martin F-35.

* Merck & Co announced the termination of a late-stage clinical trial evaluating a therapy involving its immuno-oncology drug Keytruda after interim data showed that the study's primary endpoints were unlikely to be met.

* Biogen - The U.S. biotech company and its Japanese partner Eisai announced Tuesday that Chinese authorities had granted priority review status to their Alzheimer's disease treatment Lecanemab.

* Goldman Sachs - Chief Executive David Solomon is expected to unveil the U.S. investment bank's medium-term financial targets at an investor day on Tuesday, analysts said.

* Robinhood Markets announced Monday that it has received a subpoena in December from the Securities and Exchange Commission (SEC), the U.S. securities regulator, regarding trading in cryptocurrencies.

* Oaktree Capital plans to raise $10 billion for a new fund to finance major acquisitions in private equity, the Financial Times reported Tuesday, citing a letter to clients of the U.S. asset manager.


Analyst recommendations:

  • Anywhere Real Estate: Keefe, Bruyette & Woods downgrades to market perform from outperform. PT up 18% to $7.
  • Axcelis Technologies: Loop Capital Markets initiated coverage with a recommendation of buy. PT set to $150.
  • Eli Lilly: Societe Generale downgrades to sell from hold. PT down 12% to $278.
  • Glencore: JPMorgan lowered its price target to 6.30 pounds sterling from 6.40 pounds and kept its overweight rating.
  • Mondi: J.P. Morgan downgrades from Overweight to Neutral targeting GBp 1606.
  • Pioneer Natural: Tudor Pickering & Co upgrades to buy from hold. PT up 24% to $243.
  • Prudential: Credit Suisse increased the price target to 15.40 pounds sterling from 14.50 pounds, with an unchanged outperform rating.
  • Shell: RBC reduced the price target to 29.00 pounds sterling from 32.00 pounds and maintained its outperform rating.