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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.

Good news keeps on coming

08/11/2022 | 09:45am EDT
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Investors are still cheerful, a day after the publication of a lower-than-expected inflation reading for July. Wall Street opened in the green today, after the Nasdaq 100 closed 2.85% higher yesterday, up 20% from its June lows. The S&P500 was 2.1% higher and the Dow Jones progressed 1.63%.

And there was more good news today, as US July producer prices rose less than expected, by 9.8% year-on-year, against 10.4% forecast in the Bloomberg consensus. On a monthly basis, they fell by 0.5% between June and July, against 0.2% estimated.

Meanwhile, weekly jobless claims reached 262,000 last week, compared to expectations of 264,500.

This is the first time in many months that inflation numbers came as a positive surprise in the US. The reaction of equity markets speaks for itself.

Prices have started to cool because gasoline prices have fallen sharply. Airline prices have fallen, for reasons also related to energy prices. Used car prices have subsided. Rents continued to rise, but less than expected, which also contributed to the surprise effect. On the other hand, the rise in food prices has not weakened (+1.1% in July, +10.9% year-on-year). Core inflation, which excludes food and energy, limited its increase to 0.3%, slightly less than expected, but remains high over a year (+5.9%).

The market believes that the inflation peak has passed, which cuts the Fed a bit of slack. At first, the Fed is not expected to change its tough talk. San Francisco Fed President Mary Daly just told the Financial Times that it is way too early for the U.S. central bank to "declare victory" in its fight against inflation. "There's good news on the month-to-month data that consumers and business are getting some relief, but inflation remains far too high and not near our price stability goal," she said.

But investors know how to anticipate. They believe that Jerome Powell and his team will be satisfied with a 50-point rate hike in September, whereas they were still fearing 75 points before the release of the statistics yesterday. They also know how to interpret the signs, especially when they point in the right direction – which is a return to more favorable financial conditions.

However, this is just the immediate sentiment. Soon, the market will be wondering about the pace of inflation reduction and will ponder core inflation, which is expected to fall more slowly than overall inflation...

 

Economic highlights of the day:

Producer prices and weekly unemployment figures are today's main indicators. All the macro news here.

The dollar is trading at EUR 0.9671. The ounce of gold is trading at USD 1793. Oil is losing some ground, with North Sea Brent crude at USD 98.69 per barrel and US light crude WTI at USD 93.39. The yield on 10-year U.S. debt stands at 2.78%. Bitcoin has risen back above USD 24,500.

 

On markets:

* Walt Disney announced Wednesday that it is now ahead of Netflix in the number of subscribers to its online video services, saying it will raise prices for its ad-free streaming offerings in December. The stock gained 7.8% in pre-market trading.

* Bank of America gained about 1 percent in premarket trading, as banking stocks continued to benefit from a general uptick in optimism about the economy after lower-than-expected U.S. inflation numbers released Wednesday.

* Twitter - Elon Musk's lawyers are asking the social network for the names of employees responsible for calculating the share of fake user accounts and "bots", a key issue in the conflict between Twitter and the billionaire who was once a candidate for its acquisition, a source close to the case said.

* T-Mobile - Deutsche Telekom, the first shareholder of the operator, said Thursday that it expects to become a majority shareholder well before 2024.

* Bumble - The online dating app publisher's stock is down nearly 10% in pre-market trading after it lowered its annual revenue forecast and reported a lower-than-expected quarterly profit.

* Sonos - The connected audio systems specialist fell 20% in pre-market trading after lowering its annual revenue forecast and pushing back its medium-term target due to economic uncertainties. Sonos also announced the departure of its CFO.

 

Analyst recommendations:

  • Azenta: Needham & Co cut the target to $74 from $94. Maintains buy rating.
  • Generac Holdings: Argus maintains buy rating. PT up to $280 from $250.
  • Harbour Energy: Goldman Sachs reinstated coverage with a recommendation of buy. PT up 69% to 609 pence.
  • Hub Group: Susquehanna maintains positive rating. PT up to $117 from $115.
  • IAC/InterActiveCorp: Piper Sandler adjusts price target to $100 from $110. Reiterates overweight rating.
  • Lamb Weston: Jefferies maintains buy rating. PT up to $91 from $82.
  • Masimo: Stifel raised the target to $162 from $150. Maintains buy rating.
  • Micron Technology: Mizuho Securities lowers price target to $75 from $84. Maintains buy rating.
  • Pioneer Natural Resources: Siebert Williams Shank downgrades to hold from buy. PT up 28% to $280.
  • Public Storage: UBS adjsusts price target to $364 from $336. Maintains neutral rating.
  • Roblox: Stifel raises price target to $50 from $40. Maintains buy rating.
  • Royal Caribbean Cruises: UBS cut the target to $64 from $86. Maintains buy rating.
  • Shopify: Atlantic Equities upgrades to overweight from neutral. Price target is $46.
  • TransDigm: Susquehanna Financial raised the target to $685 from $629. Maintains neutral rating.
  • Upstart Holdings: Atlantic Equities cut the recommendation to underweight from neutral. PT down 34% to $22.
  • Wynn Resorts: CBRE Research maintains buy rating. PT down to $100 from $110.

© MarketScreener.com 2022
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Stocks mentioned in the article
ChangeLast1st jan.
AZENTA, INC. -2.50% 42.86 Delayed Quote.-58.43%
BANK OF AMERICA CORPORATION -1.50% 30.2 Delayed Quote.-32.12%
BUMBLE INC. -1.87% 21.49 Delayed Quote.-36.53%
GENERAC HOLDINGS, INC. 2.29% 178.14 Delayed Quote.-49.38%
HARBOUR ENERGY PLC 0.67% 450.9 Delayed Quote.26.53%
HUB GROUP, INC. -2.89% 68.98 Delayed Quote.-18.11%
IAC INC. -1.93% 55.38 Delayed Quote.-57.63%
LAMB WESTON HOLDINGS, INC. -0.90% 77.38 Delayed Quote.22.09%
MASIMO CORPORATION -0.88% 141.16 Delayed Quote.-51.79%
MICRON TECHNOLOGY, INC. 0.18% 50.1 Delayed Quote.-46.22%
PAX DOLLAR (USDP/USD) -0.23% 0.9997 End-of-day quote.-0.02%
PIONEER NATURAL RESOURCES COMPANY 0.01% 216.53 Delayed Quote.19.05%
PUBLIC STORAGE 1.85% 292.81 Delayed Quote.-21.83%
ROBLOX CORPORATION 1.30% 35.84 Delayed Quote.-65.26%
ROYAL CARIBBEAN GROUP -13.15% 37.9 Delayed Quote.-50.72%
SHOPIFY INC. 0.64% 26.94 Delayed Quote.-80.44%
SONOS, INC. -0.79% 13.9 Delayed Quote.-53.36%
T-MOBILE US -0.35% 134.17 Delayed Quote.15.68%
TRANSDIGM GROUP INC. -1.05% 524.82 Delayed Quote.-17.52%
TWITTER, INC. 2.57% 43.84 Delayed Quote.1.43%
UPSTART HOLDINGS, INC. -1.00% 20.79 Delayed Quote.-86.26%
WALT DISNEY COMPANY (THE) -3.20% 94.33 Delayed Quote.-39.10%
WYNN RESORTS, LIMITED -2.05% 63.03 Delayed Quote.-25.88%
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