It seems that markets have now integrated the Fed's policy, which provides good visibility on its actions and gives the impression of having regained control of the scenario. Within a few months, we have gone from "don't be afraid, there won't be a rate hike anytime soon" to "don't be afraid, 50 basis point rate hikes are the norm". But the new message is now clearly understood. Easing nervousness is also illustrated by the decline in the VIX volatility index and 10-year bond yields that not only retreated from their peaks, but didn't move much after the release of the minutes.
But let's not get too excited. This reprogramming of investor expectations does not mean that all parts of the financial sphere have already adjusted. Take corporate earnings, for example. The numbers at the beginning of the year were in line with previous reporting seasons: companies are exceeding analysts' expectations. Expectations that are as usual too low because the companies themselves are guiding them to numbers that they will be able to exceed, just to reassure shareholders.
But since companies that start their fiscal year on February 1 have started releasing their Q1 results, things have changed. We have seen what this means for the US retail industry: Walmart, Target and their peers have painted a complicated picture of the future. Does this mean that the situation has deteriorated considerably in April? Perhaps. In any case, technology stocks don't seem immune either: last night, Nvidia and Snowflake (which also start their fiscal year on February 1) showed some caution and were punished out of session.
Meanwhile, new data shows the number of Americans filing new claims for unemployment benefits fell more than expected last week, decreasing 8,000 to a seasonally adjusted 210,000 for the week ended May 21, the Labor Department said. Economists polled by Reuters expected 215,000 applications.
However, we got confirmation today that the US economy contracted in the first quarter. The Commerce Department said gross domestic product fell at a 1.5 annualized rate in the second quarter, worse than the 1.4% pace of decline reported in April.
Today's economic highlights:
Three statistics in the US: weekly jobless claims, the second estimate of Q1 GDP and the University of Michigan consumer confidence index.
The dollar is down a bit to EUR 0.9347. The ounce of gold fell to USD 1845. Oil remains firm with North Sea Brent at USD 114.62 per barrel and US WTI light crude at USD 111.13. The yield on 10-year US debt stands at 2.75%, relatively stable. Bitcoin is trading around USD 29,000.
* Broadcom announced Thursday that it will buy cloud services provider VMware for $61 billion in a cash and stock deal to further diversify its business software operations.
* Twitter gains 5.6% in pre-market trading. Elon Musk announced Wednesday that he would increase his personal contribution of $6.25 billion for the buyout of the social network, completely reducing the portion of margin loans backed by TESLA stock.
* Apple expects to maintain iPhone production levels at about 220 million units this year, Bloomberg reports, as China's health restrictions, supply problems and declining demand continue to weigh on smartphone makers. Apple shares are down 1% in pre-market trading.
* NVidia - The semiconductor maker issued a lower-than-expected quarterly revenue forecast Wednesday, citing slowing demand in the video game industry, supply chain issues and containment in China. The stock lost 5.5% in pre-market trading.
* Macy's climbed 14.7% in premarket trading after raising its annual profit forecast, as the department store chain benefited from strong demand for its high-margin apparel items.
* SouthWest Airlines raised its second-quarter operating profit guidance on the back of recovering demand. The airline gained 1.3% in premarket trading.
* Alibaba reported quarterly revenue above market expectations as growing demand for some of its online shopping services in China offset the impact of restrictive anti-COVID measures in the country. The stock is up 3.6% before the opening.
* Alphabet - The British Competition and Markets Authority (CMA) launched on Thursday a second investigation into Google's advertising practices, suspected of distorting competition and illegally favoring its own services.
* Baidu, China's largest online search engine, gained 5.8 percent in premarket trading after reporting better-than-expected quarterly revenue on the strength of its cloud computing and artificial intelligence businesses.
* Medtronics, a medical device specialist, reported a 9% increase in quarterly profit on Thursday.
- Advance Auto Parts: UBS adjusts price target to $250 from $275, maintains buy rating.
- Ashtead: Jefferies remains Buy with a price target reduced from GBp 8,000 to GBp 5,000.
- ASGN: Credit Suisse downgrades to underperform from neutral, adjusts price target to $90 from $110.
- Bakkavor: Berenberg maintains a hold rating with a price target reduced from GBp 125 to GBp 110.
- Best Buy: UBS adjusts price target to $80 from $120, maintains neutral rating.
- Bodycote: Berenberg remains Buy with a price target reduced from GBp 1030 to GBp 780.
- Farfetch: Credit Suisse adjusts price target to $36 from $47, keeps outperform rating.
- FirstGroup: Berenberg starts tracking as a buy, targeting GBp 150.
- Netease: UBS adjusts price target to $124 from $131, maintains buy rating.
- Nordstrom: Credit Suisse adjusts price target to $26 from $29, keeps neutral rating.
- Restaurant Brands International: Guggenheim lowers price target to $55 from $63, maintains neutral rating.
- ServiceNow: UBS adjusts price target to $570 from $625, maintains buy rating.
- Zoom Video Communications: Guggenheim lowers price target to $130 from $160, maintains buy rating.