Now, US investors are starting to fear a recession a little more than anything else, and this is reflected in the performance of Wall Street stocks. The Nasdaq 100 lost -1% for a third consecutive session in the red and the S&P500 -0.25% yesterday. The Dow Jones (+0.24%) was buoyed by its large contingent of defensive stocks, particularly in healthcare (Johnson & Johnson, UnitedHealth, Merck and Amgen all gained more than 2%). Yesterday, the weekly employment figures were worse than expected and the twin indices of sentiment in the services sector, the PMI and ISM, came out much weaker than anticipated.

Today's job report, only added to fears of recession, since US weekly jobless claims came in at 228,000 last week, which is higher than the 200,000 expected in the consensus.

Two of the three bastions of US resilience, namely the labor market and service sector activity, are suffering. The third is household confidence, which is the main marker of consumption. In my view, the preliminary consumer confidence index from the University of Michigan, which will be released in eight days' time, will have a strong impact. But before that, as early as tomorrow, the official employment figures for the month of March will already provide some form of confirmation of the deterioration underway in the labor market. In a relative but momentary indifference, since Wall Street will be closed for a public holiday.

The fear of an economic crash has taken over hopes that the US central bank will be forced to abandon its restrictive policy. Of course, there is the issue of inflation in the middle of all this. For now, investors are content to bet against the US central bank: I said yesterday that the swaps were pointing to a 75-point rate cut by the end of the year. But since yesterday's worrying triple statistic, the cursor has moved to 100 points. The Fed's bellicose stance may be harder to maintain in the coming weeks.

Traders hoping for more clues when Federal Reserve Bank of St. Louis President James Bullard speaks later today. Meanwhile, Cleveland Fed President Loretta Mester said in an interview with Bloomberg TV yesterday that it was too early to know if the US central bank would need to increase its rate at its next policy meeting in May.

In other news, the President of Taiwan was received in the US yesterday by the Speaker of the House of Representatives, Kevin McCarthy, which obviously irritates China. We can only hope that Xi Jinping will not take it out on French president Emmanuel Macron and the president of the European Commission Ursula Von der Leyen. Both of them are meeting the Chinese leader today in Beijing to try to improve relations between the two economic powers.

On the last session of the week, before the Easter long week-end, the main three Wall Street indexes were flat.

 

Economic highlights of the day:

German industrial production for February and US unemployment figures are the main indicators today. All the agenda is here. Overnight, the Indian central bank kept its main policy rate unchanged at 6.5%, as expected. Meanwhile, China's Caixin Services Index for March accelerated to 57.8 points, above expectations.

The dollar is rather unchanged at EUR 0.9161 and GBP 0.8015. Gold is trading around USD 2010. Oil is up slightly with North Sea Brent at USD 85.18a barrel and US WTI light crude at USD 80.74. The yield on US 10-year debt falls further to 3.29%. Bitcoin is trading around USD 28,000.

 

In corporate news:

  • * Alphabet - Google plans to add conversational artificial intelligence features to the search engine, Chief Executive Sundar Pichai said in an interview with The Wall Street Journal. Google's owner Alphabet Group was up 1.1 percent in pre-market trading.
  • * AbbVie lowered its first-quarter and full-year 2023 profit forecasts, citing spending on research and development.
  • * Amazon - The UK Competition and Markets Authority (CMA) announced that it will launch an investigation into Amazon's acquisition of robot hoover maker iRobot. In addition, Amazon has announced that it will limit stock rewards for its employees.
  • * KKR is close to closing a deal to take a large stake in FGS Global that will value the financial communications company at about $1.4 billion, the Financial Times reported on Thursday.
  • * Costco was down 2.8 percent in premarket trading after reporting a decline in like-for-like sales in March.
  • * AMC Entertainment - A U.S. court on Wednesday denied the movie theater chain's request to lift a standstill order, a step that was necessary to complete a one-for-10 reverse stock split. AMC shares were up 11.4% in premarket trading.
  • * The board of directors of Bed Bath & Beyond is urging shareholders to approve a proposed reverse stock split and warns that if it fails, the home goods retailer may not be able to avoid bankruptcy.
  • * Walt Disney has announced the departure of Michael Paull, the head of its streaming business, as part of an ongoing restructuring. He will be replaced by the current president of video-on-demand platform Hulu, Joe Earley.

 

Analyst rceommendations:

  • Applied Materials: BNP Paribas Exane downgrades to neutral from outperform. PT up 13% set to $133.
  • Atlantic Union: Keefe, Bruyette & Woods downgrades to market perform from outperform. PT up 6.2% to $36.
  • Ceres Power: Goodbody starts tracking as a buy targeting GBp 542.
  • Comerica: J.P. Morgan downgrades to neutral from overweight. PT up 10% to $44.
  • FedEx: Raymond James upgrades to outperform from market perform. PT up 24% to $285.
  • Ferrari: Goldman Sachs upgrades from sell to neutral with a target of USD 283.
  • Fifth Third: Keefe, Bruyette & Woods upgrades to outperform from market perform. PT up 32% to $34.
  • Huntington Bancshares: Keefe, Bruyette & Woods upgrades to market perform from underperform. PT up 18% to $13.
  • Iris Energy: B Riley Securities initiated coverage with a recommendation of buy. PT up 43% to $4.
  • ITM Power: Goodbody starts tracking for sale targeting GBp 61.
  • KLA Corp: BNP Paribas Exane downgrades to neutral from outperform. PT up 14% to $435.
  • Mosaic: J.P. Morgan downgrades to neutral from overweight. PT down 0.6% to $46.
  • RS Group: Exane BNP Paribas starts tracking at neutral, targeting GBp 1000.
  • Skyworks: Stifel initiated coverage with a recommendation of buy. PT up 33% to $150.
  • Spirent: Goldman Sachs upgrades from sell to neutral targeting GBp 170.