The return of risk appetite has reduced the losses of the S&P500, which is down -14.7% so far in 2022. On the stock side, investors have been looking for highly leveraged stocks. This is characteristic of these bullish phases: speculation is running high on the stocks likely to make the strongest gains in a short period of time.
Markets are such that as soon as a bullish streak is taking shape, investors rush to avoid missing the train. This is what is fueling all these 2022 rebounds, in a gloomy macroeconomic context, as well as a reduction in inflationary pressure and efforts to cool overheating energy prices. Various measures drawn up by Europe to avoid an energy and social cataclysm are helping to moderate fears. The fall in gas prices is an illustration of this. Here again, nothing has been done, but confidence is moving in the right direction. Especially since, at the same time, the price of oil has also fallen. Brent crude has lost 22% in three months and 33% since its March peak at around USD 140 per barrel.
But that was until data on consumer prices for August was published today. Economists expected core inflation to rise between July and August, which would have brought annual core inflation to 6.1% from 5.9% in July. However, the consensus also expected overall US inflation to fall from 8.5% to 8.1%.
But this is not what happened, unfortunately. U.S consumer prices unexpectedly rose in August, despite lower gas prices, due to higher costs for rent and food.
The consumer price index gained 0.1% last month after being unchanged in July. Over the year, it rose 8.3%. Core CPI rose 0.6% in August after advancing 0.3% in July. It increased 6.3% in the 12 months through August after rising 5.9% in July.
After the release, markets plunged. Investors are now certain that a 75 basis points rate increase will be unveiled by the Fed next Wednesday, according to CME's FedWatch Tool. Let’s brace ourselves for a few choppy sessions…
Economic highlights of the day:
The final inflation figures for August in Germany and the first estimate of August inflation are today’s main indicators. All the macro agenda here.
The dollar rose 1% to EUR 0.9972. The ounce of gold is back up to 1702. North Sea Brent is worth USD 94.23 per barrel and US WTI light crude at USD 88.26. The yield on US 10-year debt is little changed at 3.33%. Bitcoin is trading at USD 21,300.
* Oracle reported quarterly revenue in line with expectations on Monday evening, thanks in part to the integration of Cerner, a specialist in data centers for the healthcare sector. However, its adjusted quarterly profit came in below expectations due to the stronger dollar. The stock is up 1.7% in pre-market trading.
* Twitter - A majority of the social network's shareholders voted in favor of Elon Musk's proposed $44 billion buyout, sources briefed on the vote count said Monday. Shareholders officially have until this Tuesday to vote on the billionaire's proposal.
* Alphabet - A law firm representing newspaper publishers plans to file two lawsuits, one in the U.K. and the other in the Netherlands, targeting the advertising practices of Google, a subsidiary of the group, which could expose the group to penalties of up to 25 billion euros. Alphabet's stock is virtually unchanged in pre-market trading.
* Apple, Warner Bros, Netflix - Apple TV+'s "Ted Lasso" series won the award for best comedy series for the second year in a row at the Emmy Awards on Monday. "Succession," produced by Warner Bros. subsidiary HBO, won best drama series, while Lee Jung-jae was crowned best actor in a drama series for his role in the Korean series "Squid Game," produced by Netflix.
* Uber Technologies announced Monday that it had paid $100 million in back taxes in New Jersey for giving its drivers independent contractor status when the U.S. government considers them employees, which the VTC group disputes.
* KKR - Ramsay Health Care announced Tuesday that the consortium led by U.S. private equity firm KKR has informed it that it does not intend to improve its $14.5 billion (€14.29 billion) bid for the Australian health group.
* Peloton Interactive - The co-founders of the U.S. connected-bike specialist, John Foley and Hisao Kushi, announced Monday that they will step down as directors of the struggling group. The stock was up 0.5% in after-hours trading.
* Ford - French industrial group Plastic Omnium said Tuesday it is expanding its production capacity in the United States to supply Ford Trucks with hydrogen fuel tanks.
* Rent the Runway - The online clothing rental platform fell 23% in premarket trading after announcing a cost-cutting plan and lowering its revenue forecast for this year.
APA Corporation: Citigroup upgrades to buy from neutral, raises price target to $58 from $40
Carvana: Piper Sandler raised its recommendation to "overweight" from "neutral".
CNO Financial: RBC Capital Markets initiated coverage with a recommendation of outperform. PT up 29% to $25.
Costco Wholesale: Evercore ISI adjusts price target to $600 from $510, maintains outperform rating.
DocuSign: JPMorgan reinstates with neutral rating, $65 price target.
Entain: HSBC upgrades from hold to buy targeting GBp 1490.
Hiscox: Investec downgrades to hold from buy. PT up 2.5% to 950 pence.
Lowe's: Evercore ISI adjusts price target to $240 from $210, maintains outperform rating
Oracle: JP Morgan retains his positive opinion on the stock with a Buy rating. The target price has been modified and is now set at USD 84 compared to USD 82.
O'Reilly Automotive: Evercore ISI adjusts price target to $765 from $690, maintains outperform rating.
Steven Madden: Loop Capital Markets downgrades to hold from buy. PT down 4.7% to $30.
SVB Financial Group: Piper Sandler lowers price target to $450 from $500, maintains overweight rating.