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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.

There are two ways to see inflation data

08/12/2022 | 08:49am EDT
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Since Wednesday afternoon, investors thought that a prolonged rally was underway. But this did not materialize, perhaps because indexes have already rebounded quite a bit since the beginning of the summer. Today's session will either confirm or deny recent trends.

Yesterday, the Dow Jones and the S&P inched down by 0.08% and 0.07%, respectively. The Nasdaq 100, which had jumped by 2.85% the day before and which was promised a bullish trajectory after Wednesday's good surprise on inflation, finally fell by 0.65%.

All this is a bit confusing. In the United States and the rest of the financial world, investors were reassured to see that the rise in consumer prices began to ease in July, but they remained cautious after the sharp decline in producer prices over the same period. The news confirms that inflation is cooling, but investors also seem to see it as a sign that the economy is slowing.

Still, stock futures were in the green today, as lower inflation means that the Fed may not raise rates by 0.75% in September as was previously expected, but by 0.50%. According to the CME FedWatch tool, 59.5% of investors are expecting a 0.50% hike in September.

However, San Francisco Fed President Mary Daly told Bloomberg Television that the latest inflation figures are "significant in that they are saying that we're seeing some improvement but they're not victory."

She said that at this point, she supports a 50 basis points increase when the Fed next meets in September, but keeps an "open mind" if additional data calls for a larger increase.

The University of Michigan index, which measures U.S. consumer confidence in August, and which is published at 10am today, will give additional clues about how consumers are affected by prices and what impact it has on demand.

The Bloomberg consensus points to an increase to 52.5 points for August, compared to 51.5 in July.

 

Economic highlights of the day:

European industrial production for June and the University of Michigan consumer confidence index will close the week of macroeconomic indicators. All the macro agenda is here.

The dollars is trading at EUR 0.97353. The ounce of gold remains in its recent zone at USD 1795. Oil rallies, with North Sea Brent crude at USD 98.10 per barrel and U.S. light crude WTI at USD 92.61. The yield on 10-year U.S. debt is rising to 2.85%. Bitcoin is hovering around USD 24,000.

 

On markets:

Johnson & Johnson announced Thursday that it will stop marketing its talcum powder as early as 2023 worldwide, more than two years after it stopped selling it in the U.S. and Canada following thousands of accusations that the product caused cancer in its users.

* Pfizer was up 0.4% in premarket trading after losing 3.3% the day before in response to growing concerns about Zantac-related lawsuits in the U.S.

* Twitter - Ark Invest, the investment fund manager led by Cathie Wood, announced that it has sold almost all of its remaining holdings in the social network.

* Rivian- The electric vehicle maker gained 1.6% in pre-market trading as the release of better-than-expected quarterly sales outweighed a forecast for a larger-than-expected annual operating loss.

* Several Chinese state-owned groups, including insurer China life insurance and oil company Sinopec, announced plans to end their listings on the New York Stock Exchange..

* Illumina - The genetic sequencing company's stock fell nearly 15% in premarket trading after quarterly results were deemed disappointing, leading at least four analysts to lower their price targets.

* Toast - The share price of the software company for the restaurant industry jumped 15.9% in pre-market trading after it reported higher-than-expected quarterly sales and raised its annual forecast.

 

Analyst recommendations:

  • Applied Industrial Technologies: Baird downgrades to neutral from outperform. PT up 8.5% to $129.
  • Archer-Daniels-Midland: Wolfe Research put a recommendation of outperform. PT up 39% to $117.
  • Bunge: Wolfe Research initiated coverage with a recommendation of outperform. PT up 29% to $127.
  • Cigna: Raymond James adjusts price target to $330 from $300. Reiterates strong buy rating.
  • CrowdStrike: Guggenheim starts at buy with $270 price target.
  • Equinix: Argus adjusts price target to $780 from $700. Maintains buy rating.
  • Huntsman: RBC Capital Markets maintains outperform rating. PT up 48%.
  • International Flavors & Fragrances: Citigroup reinstates at neutral with $126  price target.
  • O'Reilly Automotive: Guggenheim Securities maintains buy rating. PT up to $823 from $730.
  • Salesforce: Guggenheim initiates at sell with $150 price target.
  • ServiceNow: Guggenheim starts at neutral with $510 price target.
  • Snowflake: Guggenheim initiates at sell with $125 price target.
  • Splunk: Guggenheim starts at buy with $160 price target.
  • Teladoc: DA Davidson starts at buy with $45 price target.
  • Walt Disney: Rosenblatt Securities raised the target to $140 from $124. Maintains buy rating.
  • Wendy's: Piper Sandler maintains overweight rating. PT up to $24 from $20.
  • Ziff Davis: Susquehanna Financial cut the target to $120 from $140. Maintains positive rating.
  • Zentalis Pharmaceuticals: Morgan Stanley lowers price target to $60 from $95. Keeps overweight rating.

© MarketScreener.com 2022
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Stocks mentioned in the article
ChangeLast1st jan.
APPLIED INDUSTRIAL TECHNOLOGIES, INC. 2.11% 102.78 Delayed Quote.0.08%
ARCHER-DANIELS-MIDLAND COMPANY -0.20% 80.45 Delayed Quote.19.03%
BUNGE LIMITED 0.40% 82.57 Delayed Quote.-11.56%
CHINA LIFE INSURANCE COMPANY LIMITED -2.98% 9.76 Delayed Quote.-22.14%
CIGNA CORPORATION -1.10% 277.47 Delayed Quote.20.83%
CROWDSTRIKE HOLDINGS, INC. -0.54% 164.81 Delayed Quote.-19.51%
EQUINIX, INC. 1.33% 568.84 Delayed Quote.-32.75%
HUNTSMAN CORPORATION -0.04% 24.54 Delayed Quote.-29.64%
ILLUMINA, INC. -1.56% 190.79 Delayed Quote.-49.85%
INTERNATIONAL FLAVORS & FRAGRANCES INC. -0.82% 90.83 Delayed Quote.-39.71%
JOHNSON & JOHNSON -0.71% 163.36 Delayed Quote.-4.51%
O'REILLY AUTOMOTIVE, INC -1.18% 703.35 Delayed Quote.-0.41%
PAX DOLLAR (USDP/USD) -0.23% 0.9997 End-of-day quote.-0.02%
PFIZER, INC. -0.91% 43.76 Delayed Quote.-25.89%
RIVIAN AUTOMOTIVE, INC. 1.86% 32.91 Delayed Quote.-68.26%
SALESFORCE.COM, INC. -2.02% 143.84 Delayed Quote.-43.40%
SERVICENOW INC. -2.05% 377.61 Delayed Quote.-41.83%
SINOPEC OILFIELD SERVICE CORPORATION -1.10% 0.45 Delayed Quote.-30.00%
SNOWFLAKE INC. -0.22% 169.96 Delayed Quote.-49.83%
SPLUNK INC. -3.34% 75.2 Delayed Quote.-35.02%
TELADOC HEALTH, INC. -3.35% 25.35 Delayed Quote.-72.39%
TOAST, INC. -4.29% 16.72 Delayed Quote.-51.83%
TWITTER, INC. 2.57% 43.84 Delayed Quote.1.43%
WALT DISNEY COMPANY (THE) -3.20% 94.33 Delayed Quote.-39.10%
ZENTALIS PHARMACEUTICALS, INC. 0.84% 21.66 Delayed Quote.-74.23%
ZIFF DAVIS, INC. -1.76% 68.48 Delayed Quote.-38.23%
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