Yesterday, markets were buoyant in anticipation of Nvidia’s results. In Europe, the mood was generally positive. PMI indicators came in way below expectations, so much so that investors cheered the numbers, thinking central banks will think twice before raising rates again to avoid damaging the economy further. Once again, bad economic news is good news for equity markets.

In the U.S., investors bought the market, particularly the Nasdaq (+1.6%), while awaiting Nvidia's results after the close. The company is both the new darling and the new barometer of Wall Street, because it now carries a huge "AI is me" flag. One of the great things about off-market quotations is that you can quickly see how a publication is being received. With Nvidia's share price up 6.5%, we can conclude that the test has been passed. The star of graphics cards, whose power is perfectly calibrated for the needs of artificial intelligence, doubled its revenues in the second fiscal quarter (which runs from May to July, because the company closes its accounts on January 31). This is more than expected. The forecast for the current quarter is even more breathtaking: +170% compared to the same quarter last year. By the end of its fiscal year, Nvidia is expected to have recorded sales of more than $50 billion, which is five times more than in fiscal 2020. With this insane growth comes insane profitability: 46% net margin in the last quarter. Management expects this to continue - the market likes it - and has pulled out the usual share buyback program - the market also likes it - as a way of icing on the top. The 25-billion-dollar share buyback program sends a subliminal message to the market: we're taking the liberty of buying shares at this price because we think they're undervalued.

Nvidia put stock markets on the right track by crudely validating the hypothesis that AI is a big thing that will potentially boost business. Headlines about the American group, whose capitalization is slowly approaching that of Amazon ($1,400 billion), will take precedence over the rest of the news, as we await Jerome Powell's speech at the Jackson Hole symposium tomorrow. At this stage, the probability of a pause on US rates at the September 20 decision is 86.5%, according to CME's FedWatch tool. The status quo is also expected at the following meeting, on November 1, but with a narrow majority (57.7%). The Fed chairman's words will be used to adjust these percentages.

US stock futures were mostly in the green this morning, with Nasdaq futures up 0.9% and S&P 500 futures up by 0.5% before the start of trading. Dow futures inched down 0.1%.

US weekly jobless claims came in below expectations last week at 230,000, while 240,000 was expected in a Bloomberg consensus.

Economic highlights of the day:

July's durable goods orders and the latest US weekly employment data are on the agenda. 

The dollar is trading at EUR 0.9228 and GBP 0.7905. The ounce of gold is worth USD 1914. Oil resumes its decline, with North Sea Brent at USD 82.90 a barrel and US light crude WTI at USD 78.87 USD. The yield on 10-year US debt fell to 4.20%. Bitcoin is trading at around USD 26,400.

In corporate news:

  • Boeing was down 1.7% before the opening after the company said that a problem with the supplier of the new 737 MAX would delay aircraft deliveries. Spirit Aerosystems is down 3.4% in the wake of Boeing.
  • Goldman Sachs, JPMorgan Chase, Morgan Stanley and UBS agreed to pay $499 million to settle an antitrust lawsuit filed by investors accusing them of stifling competition in the stock-lending segment.
  • CVS Health said Wednesday it had launched a new company called Cordavis that will work directly with manufacturers to market and co-produce biosimilar drugs for the US market. Next year, the company will partner with Swiss drugmaker Novartis' Sandoz unit to market Hyrimoz, a version of ABBVIE's Humira drug, at a price more than 80% lower than the brand-name drug.
  • U.S. Steel falls 3% in pre-market trading, as Esmark Group withdraws its bid for the steel producer.
  • Dollar Tree forecasts annual earnings of between $5.78 and $6.08 per share for fiscal 2023, compared with previous forecasts of between $5.73 and $6.13, due to lower consumption and higher inflation. The retailer fell by 9.3% before the opening.
  • US-listed Netease shares lost 2.5% before the opening, as the group reported second-quarter net income of 24.01 billion yuan (3.03 billion euros), below analysts' expectations of 24.95 billion.
  • Splunk - The manufacturer of data analysis software forecasts third-quarter sales of between $1.02 billion and $1.035 billion, with analysts expecting an average of $981.34 million. The group gained 9% after the close.
  • Autodesk - The 3D design software manufacturer gained 1.88% after the close, as the company reported second-quarter adjusted earnings per share of $1.91, against consensus of $1.73.
  • Guess jumped 20% in after-hours trading, after raising its adjusted EPS guidance to between $2.88 and $3.08 per share, against previous forecasts of between $2.60 and $2.90.
  • Snowflake - The cloud data analytics company gained more than 3% after the close. Group sales rose by around 36% to $674 million for the quarter ended July 31, above the average analyst estimate of $662.2 million, according to Refinitiv data.

Analyst recommendations:

  • Amazon: Piper Sandler raised the target to $185 from $175. Maintains overweight rating.
  • Bp plc (bp/ ln): Landesbank Baden-Wuerttemberg maintains its Buy recommendation with a price target reduced from 620 to 560 GBP.
  • Crest nichols: Barclays maintains its equally-weighted recommendation with a price target reduced from 2.45 to 2 GBP.
  • Croda international: Morgan Stanley maintains its Overweight/Inline recommendation with a price target reduced from 6,600 to 6,500 GBP.
  • Darktrace plc: Liberum maintains its buy recommendation with a price target raised from 400 to 440 GBP.
  • Derwent london: Barclays maintains its underweight recommendation with a price target reduced from 22 to 20.40 GBP.
  • International Flavors: Morgan Stanley  cut the recommendation on International Flavors & Fragrances Inc. to equal-weight from overweight. PT up 12% to $75.
  • Epam Systems: Scotiabank initiated coverage with a recommendation of sector perform. PT up 6.5% to $265.
  • John wood group: Canaccord Genuity upgraded from hold to buy, with target price reduced from 240 to 225 GBp.
  • Nvidia: WestPark Capital raised its recommendation to buy from hold. PT up 46% to $690.
  • Xcel Energy: Barclays initiated coverage with a recommendation of equal-weight. PT set to $60.