The stock market session was again bumpy yesterday, with a new big gap between the Dow Jones (+0.15%) and the Nasdaq 100 (-2.2%). The technology index lost 29.8% from the records set in mid-November 2021. The Dow Jones is at -11% from its more recent peak (January 2022). "Only"-11%, if I may say so.
Yesterday, the blow came from the particularly pessimistic comments of Snap's management after the announcement of weak results. Snapchat's parent company made it clear that there are more complicated times ahead for social network advertising revenues. As a result, the stock was down 43% at the close. It sounds very excessive, but this percentage also includes the correction of the irrational exuberance of some past valuations.
Investors had no trouble convincing themselves that they were paying the right price when revenue growth trajectories pointed to infinity. Now, the slopes are less steep... Snap, which is rather small compared to many other Californian companies that keep us glued to our smartphones, has dragged its rivals down with it. Alphabet (Google) lost 5%, Meta (Facebook) 7.6% and Amazon 3.2%. Smaller peers like Pinterest (-23%) also got slashed. I read that about $200 billion in capitalization evaporated from social media yesterday.
Two statistics published yesterday were below expectations: the Richmond Fed's activity index disappointed and the new housing figures are starting to bear the scars of the 0.5% rate hike. The sense from all of this is that the U.S. economy is beginning to be affected by the current turmoil but also that overheating is beginning to subside. Investors have reflected this by lowering their expectations of what rates will be in a few months, which is why the yield on US government bonds has fallen. This is a positive signal for the market: basically, the Fed may not have to be as aggressive as feared down the road.
Today, Durable Goods Orders for the month of April came in lower than expected, at+0.4% vs +0.7% expected, and below the +0.6% reported in March.
Economic highlights of the day:
The durable goods orders and the minutes of the last Fed meeting are due today.
The dollar is up 0.6% to EUR 0.9374. The ounce of gold is worth USD 1851. Oil remains very close to its recent levels with North Sea Brent at USD 114.17 per barrel and US WTI light crude at USD 110.43. The yield on 10-year US debt stands at 2.76%, down. Bitcoin is trading just below USD 30,000.
* Nike has not renewed its contracts with its main franchisee in Russia, the daily Vedomosti reported Wednesday.
* Apple has asked its suppliers to speed up the development of future versions of the iPhone after delays caused by strict containment measures decided in recent months by Chinese authorities, Nikkei reported Wednesday, citing multiple sources close to the case. Apple shares were down 0.4% in pre-market trading.
* Pfizer will sell all of its patented drugs, including Paxlovid for COVID-19 and its blockbuster breast cancer treatment Ibrance, in 45 of the world's poorest countries at cost, the U.S. drugmaker announced Wednesday.
* Amazon is holding its annual general meeting this Wednesday, during which its shareholders will have to vote on an unprecedented 14 resolutions questioning its commercial, social and environmental practices.
* Nordstrom - The department store chain's stock gained more than 9 percent in pre-market trading after it raised its annual revenue and profit forecasts.
* Wendy's - Activist investor Nelson Peltz, the fast-food chain's largest shareholder, said Tuesday he is considering a takeover bid. The stock was up nearly 12% in pre-market trading.
* Lyft announced on Tuesday a sharp slowdown in hiring and said it is considering cutting expenses in some of its operations to limit cost increases. The stock was down 0.8% in premarket trading.
* Intuit advanced 2% in premarket trading as the accounting software company raised its guidance, saying it was not affected by the deteriorating economic environment and concerns about inflation.
* Clearway Energy, Sunpower - The two stocks gained 6.5% and 7.8% respectively in pre-market trading after TotalEnergies announced that it would buy 50% of Clearway's parent company from Global Infrastructure Partners (GIP), which will become a 50% minus one shareholder in SunPower's parent company, controlled by the French group.
* Toll Brothers - The residential construction group gained 3.6% in pre-market trading after reporting a quarterly profit above the Refinitiv consensus.
- Advance Auto Parts: Truist Securities lowers PT to $238 from $276. Maintains buy rating.
- Air Products: Atlantic Equities raised the recommendation to overweight from neutral. PT up 22% to $290.
- Best Buy: Citi cut the target to $65 from $80. Maintains sell rating.
- Camden Property Trust: Truist Securities adjusts price target to $160 from $186, maintains buy rating.
- Deere & Company: UBS adjusts price target to $360 from $380, maintains neutral rating.
- Foot Locker: Williams Trading downgrades to sell from hold, trims price target to $23 from $25.
- Hikma: J.P. Morgan downgrades from Overweight to Neutral targeting GBp 1900.
- Homeserve: Jefferies remains Hold with a price target raised from GBp 830 to GBp 1200.
- HSBC: AlphaValue remains at "light" with a target raised from GBp 462 to GBp 511.
- Intuit: Piper Sandler adjusts price target to $500 from $674, reiterates overweight rating.
- JPMorgan : Societe Generale upgrades to buy from hold, lifts price target to $150 from $145.
- J Sainsbury Plc: Credit Suisse downgrades to underperform from neutral. PT up 1.8% to 231 pence.
- Kilroy: Goldman Sachs upgrades to buy from neutral. PT jumps 41% to $84.
- Magellan Midstream: J.P. Morgan upgrades to overweight from neutral. PT up 17% to $57.
- Mondi: Berenberg upgrades from hold to buy targeting GBp 2000.
- Ralph Lauren: Wells Fargo Securities lowers target to $95 from $110. Maintains equal-weight rating.
- Tesco: Credit Suisse downgrades to neutral from outperform. PT up 14% to 292 pence.
- Williams-Sonoma: UBS adjusts price target to $100 from $140, maintains sell rating.