Today on Wall Street: Good news keep markets at record highs

The fear-mongers who were a little too quick to draw their famous "I told you so" a few days ago have had their money's worth at the end of the week, as the main stock markets have returned to their highs. For some indices, which had lagged a bit at the beginning of the year, new peaks were even reached, particularly in the United States. The stock market continues to look unsinkable, finding new reasons for optimism every week.

Futures tracking the S&P 500 and Nasdaq 100 indexes hovered close to record highs today, fueled by gains in US banks after the Fed announced they have passed the latest stress test and will no longer face restrictions on buying back stock and paying dividends. In addition, Nike posted strong result yesterday, which were largely higher than expected.

Wall Street also benefitted from Joe Biden's bipartisan infrastructure deal and reassurances from Fed Chair Jerome Powell calmed nerves after the central bank's hawkish surprise last week.

Today, new data showing inflation rose in May at the fastest pace since 2008. The Personal Consumption Expenditures inflation index, released today, jumped by 3.9 percent in the year through May, in line with a Bloomberg survey. On a monthly basis, the index inched up by 0.4 percent, which is below the 0.5 percent expected. This could indicate that the recent inflation surge is easing, and could indeed be transitory, as the Fed believes. However, Bank of America said in a note that it expects U.S. inflation to remain elevated for two to four years.

In other news, an interesting story about DeepGreen was reported by Bloomberg and the Wall Street Journal, which illustrates very well the contradictions of green finance. The company is offering to mine the seabed for minerals. It will enter the New York market by merging with SPAC Sustainable Opportunities Acquisition on the basis of a valuation of $2.9 billion. The company is an offshoot of another company that has already sunk once, swallowing more than half a billion dollars, while stirring up controversy with environmentalists over the destruction of the marine environment and leaving a nice slate for Papua New Guinea, which had allowed itself to be dragged into the venture. This time, DeepGreen, renamed The Metals Company, has refined its environmental discourse. There is "sustainable", "green" and "clean energy" all over the place, along with a discourse on the circular economy. Marine conservationists are choking. But that doesn't stop the company from merging with a so-called "green" SPAC and attracting ESG capital. The Wall Street Journal's conclusion is that green investing has always been a catch-all term, but it's even more so now that mountains of cash are pouring in.

 

Economic highlights of the day

In the United States, the Personal Consumption Expenditures inflation and the June University of Michigan consumer confidence index are the main data.

The dollar is down against the dollar at EUR 0.8357, while the ounce of gold continues to hover at USD 1788. Oil remains firm with a barrel at USD 75.8 for Brent and USD  73.5 for WTI. US debt yields are roughly unchanged at 1.49% over 10 years. Bitcoin is down to USD 33,000.

 

On markets:

* Nike - Shares of the world's No. 1 sports equipment maker are up 11 percent in pre-market trading and headed for a record high in reaction to Thursday night's release of above-consensus quarterly results and forecasts that beat Wall Street estimates. At least 12 analysts have raised their price targets.

* Major banking stocks are up in pre-market trading after the Federal Reserve released positive stress test results

* Amazon, Alphabet - The U.K. competition authority on Friday opened a formal investigation into Amazon and Google on suspicion of not doing enough to combat fake reviews on their respective sites.

* Fedex - The express delivery and logistics group's shares lost nearly 4% in pre-market trading the day after it reported its quarterly results. The group explained that recruitment difficulties weighed on the activity and on the financial outlook for the year 2022. In its wake, UPS is down 1.2%.

* Pfizer announced on Thursday that it would stop distributing Chantix (also marketed under the name Champix), which is prescribed for the treatment of smoking cessation, after discovering that it contained a high level of nitrosamines, carcinogenic components.

* Tesla gained nearly 1% in pre-market trading after Joe Biden announced a bipartisan compromise on his infrastructure investment plan, which includes $174 billion for electric vehicles. In other news, Japan's Panasonic Group said Friday it sold its stake in the electric car maker for about 400 billion yen in the fiscal year ended March.

* Virgin Galactic Holdings gained 5 percent in pre-market trading after the federal aviation regulator FAA gave the green light for commercial flights after a successful test flight.

* Rockwell Automation announced Friday that it has bought software company Plex Systems for $2.22 billion in cash.

* Blackberry gained 1.3 percent in after-hours trading Thursday as Wall Street closed in response to a better-than-expected quarterly revenue report.

 

Analyst recommendations:

• Acceleron Pharma : Oppenheimer adjusts pt to $160 from $141, maintains outperform rating
• Accenture : Wedbush adjusts pt to $330 from $280 on upbeat fiscal q3 results, maintains outperform rating
• Aveva: HSBC upgraded stock from hold to buy with a target of GBp 4345.
• Colgate-Palmolive : UBS assumes coverage of colgate-palmolive with buy rating, $95 price target
• Comcast : UBS changes price target to $60 from $56, maintains neutral rating
• Darden Restaurants : Wolfe Research lifts pt to $160 from $129, maintains outperform rating
• DoorDash : KGI Securities starts doordash at hold with $200 price target
• Eli Lilly and Company : Mizuho adjusts price target to $250 from $216, maintains buy rating
• Equinix, Inc. (REIT) : Oppenheimer lifts price target to $880 from $820, maintains outperform rating
• The Hershey Company: Consumer Edge raises pt to $178 from $163, maintains equal-weight rating
• Intel Corporation: Bernstein maintains its advice to sell. The target price remains unchanged at $43.
• Microsoft : KB Securities lifts pt to $300 from $250, maintains buy rating
• Nike, Inc: Jefferies research applies a Buy rating. The target price is revised upwards from USD 200 to USD 192.
• Procter & Gamble : UBS assumes coverage with neutral rating, $138 price target
• PureCycle Technologies : Oppenheimer adjusts pt to $28 from $24 after investor day, maintains outperform rating
• Raven Industries : CJS Securities downgrades raven industries to market perform from market outperform
• Roku : Masterlink Securities lifts pt to $500 from $430, maintains buy rating
• Vitec: Jefferies remains Buy with a price target raised from GBp 1625 to GBp 1665.