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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.

New reasons to hope

08/18/2022 | 10:01am EDT
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Wall Street is rather calm, after weekly jobless claims came in slightly slower than expected this morning, which proves again that the U.S. job market is resilient. They reached 250 000 last week, against 263,500 expected.

This comes after the release of the Federal Reserve's July meeting minutes that seem to indicate that the central bank might go for slightly less aggressive rate hikes going forward.

"With inflation remaining well above the Committee’s objective, participants judged that moving to a restrictive stance of policy was required to meet the Committee’s legislative mandate to promote maximum employment and price stability," the minutes said.

According to the CME FedWatch tool, Investors now give a 65.5% chance that the Fed raising rates by 50 basis points in September, instead of 75 bps, which, until recently, seemed to have become the new normal.

Data for July recently shown that we might have passed the inflation peak, and investors are now looking forward to the Fed's annual Jackson Hole symposium next week to get more clues on how it will adapt its monetary policy accordingly.

It was the decline in oil prices that allowed inflation to cool down, both at the gas station and indirectly via business costs. The psychological impact of lower gasoline prices on consumers is considerable. If the easing continues or, better still, if the barrel breaks through new symbolic thresholds, the pressure will continue to ease.

The correlation between stock prices and oil prices can vary depending on the circumstances. In recent weeks, it has been quite apparent: when oil falls, Wall Street tends to rise. This is because investors see it as a support factor for the reduction of inflation, which allows them to envisage a shorter and/or weaker rate hike cycle.

 

Economic highlights of the day:

Today, on the agenda, we have the Philly Fed index, weekly jobless claims and Existing Home Sales. All the macro agenda here.

The dollar is up 0.2% to 0.9850. The ounce of gold is down to USD 1766. Oil rallies, with North Sea Brent crude at USD 95.40 per barrel and U.S. light crude WTI at USD 89.64. The yield on 10-year U.S. debt rises to 2.87%. Bitcoin is trading around USD 23,400.

 

On markets:

* Kohl's fell 9.6% in premarket trading as the U.S. department store chain cut its full-year profit and revenue forecasts on Thursday due to deep discounts and higher costs amid falling demand in the face of high inflation.

* The Estee Lauder Co fell 2% in premarket trading as the U.S. cosmetics maker said it expects net sales to rise between 3% and 5% in 2023, compared with an average increase of 7.6% expected by analysts, according to IBES data from Refinitiv.

* Tesla - The U.S. automaker said Thursday it has cut the wait time for deliveries of its Model Y vehicles in China to a minimum of four weeks as the company ramps up production at its upgraded Shanghai plant. The stock was up 0.6% in pre-market trading.

* Cisco - The U.S. network equipment specialist's stock gained 4.6% in premarket trading in response to the group's forecast of a 2% to 4% increase in revenue for the current quarter after better-than-expected profit and revenue in the previous quarter, amid easing supply chain tensions.

* Tapestry said Thursday it expects full-year profit to be below consensus after a quarter of lower-than-expected sales due to health restrictions in China that hurt its handbag and apparel sales in the country. The stock was down 2.2% in pre-market trading.

* Bed Bath & Beyond is down 11.7% in premarket trading Thursday as Gamestop chairman Ryan Cohen, the second-largest shareholder in the houseware's retailer, filed to sell his 9.45 million-share stake in the group.

 

Analyst recommendation:

  • Agilent Technologies: USB raised the target to $152 from $139. Maintains buy rating.
  • Auto Trader: Bank of America maintains buy rating and raised price target to 7.95 pounds sterling from 7.60 pounds.
  • Casey's General Stores: Wolfe Research initiated coverage with a recommendation of outperform. PT set to $228.
  • Cognizant Technology Solutions: HSBC cut the recommendation to hold from buy. Price Target set to $79.
  • Essential Utilities: HSBC raised the recommendation to buy from hold. PT jumps 9.8% to $57.
  • Illumina: UBS cut the target to $245 from $350. Maintains neutral rating.
  • Itm Power: Goldman Sachs downgrades to sell from neutral. PT down 9.2% to 220 pence.
  • Jack Henry & Associates:  D.A. Davidson & Co downgrades to neutral from buy. Price target jumps to $210.
  • Masco: Deutsche Bank reinstated coverage with a recommendation of hold. PT up 8.4% to $61.
  • Perkinelmer: Stifel lowers expectations to hold from buy. PT up 13% to $170.
  • Pool: Deutsche Bank reinstated coverage with a recommendation of hold. PT set to $431 implies a 11% increase from last price.
  • Principal Financial Group: Credit Suisse cut the recommendation to neutral from outperform. PT up 9.2% to $86.
  • Ralph Lauren: Cowen maintains outperform rating. PT up to $128 from $142.
  • Take-Two Interactive Software: Deutsche Bank cut the recommendation to hold from buy. PT soared 17% to $160.
  • Trex: Deutsche Bank reinstated coverage with a recommendation of buy. PT up 62% to $87.
  • Watsco: Deutsche Bank starts with a recommendation of hold. PT up to $311.

© MarketScreener.com 2022
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Stocks mentioned in the article
ChangeLast1st jan.
AGILENT TECHNOLOGIES, INC. -0.97% 121.55 Delayed Quote.-23.86%
AUTO TRADER GROUP PLC 4.02% 515 Delayed Quote.-30.41%
BED BATH & BEYOND INC. -1.62% 6.09 Delayed Quote.-58.23%
CASEY'S GENERAL STORES, INC. -0.87% 202.52 Delayed Quote.2.62%
CISCO SYSTEMS, INC. -1.40% 40 Delayed Quote.-36.88%
COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION -1.73% 57.44 Delayed Quote.-35.26%
ESSENTIAL UTILITIES, INC. -2.24% 41.38 Delayed Quote.-22.93%
ILLUMINA, INC. -1.56% 190.79 Delayed Quote.-49.85%
ITM POWER PLC 2.75% 104.6 Delayed Quote.-73.45%
JACK HENRY & ASSOCIATES, INC. -0.42% 182.27 Delayed Quote.9.15%
KOHL'S CORPORATION -0.75% 25.15 Delayed Quote.-49.08%
MASCO CORPORATION -1.25% 46.69 Delayed Quote.-33.51%
PAX DOLLAR (USDP/USD) -0.23% 0.9997 End-of-day quote.-0.02%
PERKINELMER, INC. -0.85% 120.33 Delayed Quote.-40.15%
POOL CORPORATION 0.77% 318.21 Delayed Quote.-43.78%
POWER SOLUTIONS, LTD. -0.99% 2495 Delayed Quote.7.88%
PRINCIPAL FINANCIAL GROUP, INC. 1.02% 72.15 Delayed Quote.-0.25%
RALPH LAUREN CORPORATION -2.68% 84.93 Delayed Quote.-28.55%
TAKE-TWO INTERACTIVE SOFTWARE, INC. 0.39% 109 Delayed Quote.-38.67%
TAPESTRY, INC. -1.59% 28.43 Delayed Quote.-29.98%
TESLA, INC. -1.10% 265.25 Delayed Quote.-24.70%
THE ESTÉE LAUDER COMPANIES INC. -1.57% 215.9 Delayed Quote.-41.68%
TREX COMPANY, INC. -1.06% 43.94 Delayed Quote.-67.46%
WATSCO, INC. 0.56% 257.46 Delayed Quote.-17.71%
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