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OFFON

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.

Today on Wall Street: Tapering in sight

11/01/2021 | 09:55am EST
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The last session of October was positive overall, after a rather complicated September. Wall Street has set a triple record, European markets are up, and even China is participating in this upturn, as shown by the monthly scores of the MSCI China (+4.07%) and the Hang Seng (+3.54%). Today, Wall Street is rather mixed.

Nearly 50% of the companies in the US broad index have published their quarterly results, with a trend that is confirmed: the figures exceed expectations, with an average rate of earnings growth in the third quarter of 38.6%. However, this average falls to 31% if we exclude oil companies, which are taking advantage of the surge in oil and natural gas prices to boost their results. As proof of this, the windfall of energy price inflation has allowed the US oil sector to increase its revenues by an average of 1570% in the third quarter compared to the same period last year, when oil was trading at around USD 35 per barrel. As such, it is not surprising to see that the best annual gains in the S&P500 are dominated by the oil sector, with Devon Energy (+156% since January 1), Marathon Oil (+146%) and DiamondBack Energy (+125%) having the best performance this year.

Another highlight is that analyst firms continue to raise their BNA estimates for the fourth quarter, but at a slower pace compared to the third quarter, which was itself lower than the second quarter, a process known as normalization. Still on the microeconomic front, even though quarterly results from stock market champions are now behind us, let’s not forget that the results of NXP Semiconductors, Pfizer, Amgen, Activision Blizzard, Qualcomm, Alibaba, Moderna, Dominion Energy are on the shelves by Friday.

While earnings season will continue to weigh on market trends, there are other important events of the week. On Wednesday night, the U.S. central bank will give its periodic update on rates and monetary policy. Jerome Powell, who has acknowledged that inflation is more problematic than expected, is expected to explain how the Federal Reserve is going to implement tapering, reconciling the search for full employment and price stability, a fine balancing act. Still on the macroeconomic front, there are several economic indicators to circle in red in your diaries. The manufacturing and services PMIs will be released early this week. After the Fed on Wednesday, the Bank of England will enter the arena on Thursday, before investors take note of the October employment figures in the United States.

A word about the G20 meeting that took place this weekend ahead of the 26th United Nations Climate Change Conference. Decisions adopted there have already been negotiated earlier, which was the case for the reform of the global minimum tax. After various concessions, the heads of state and government gave their final green light to the introduction of a 15% global minimum tax on multinationals. But as is often the case, the devil is in the details. Each country must now approve this agreement, which promises new twists and turns on the horizon.

 

Economic highlights of the day:

The focus is on the ISM Manufacturing PMI, and Construction spending in the US. October ISM Manufacturing Index came in at 60.8 vs. 60.3 expected and 61.1 prior. This morning, Japan released good monthly figures with a manufacturing PMI slightly above consensus at 53.2 points. In China, the manufacturing PMI for October is moving away from the contraction zone and is at 50.6 points according to the Caixin marker.

The dollar is digesting its fall against the dollar to EUR 0.8642. Gold is once again refusing to flirt with the USD 1,800 USD. Oil is regaining some height at USD 84.74 per barrel of Brent and USD 84.68 per barrel of WTI. US debt yields are back on the downside at 1.156% over 10 years. Bitcoin is trading at USD 61600.

 

Analyst recommendations:

  • Alnylam: Oppenheimer & Co upgrades to outperform from market perform. PT up 25% to $200
  • Amazon: RBC is still long and has lowered its target from USD 4150 to USD 4000. JP Morgan is also buy but with a target raised from USD 4100 to USD 4350.
  • AMD: Northland Securities Inc cut the recommendation on Advanced Micro Devices Inc. to market perform from outperform. PT set to $120, implies a 0.2% decrease from last price. AMD average PT is $132.06.
  • Atlassian: SMBC Nikko maintains a Buy rating and raises its target from USD 337 to USD 540.
  • Bank of America: Baird downgrades to underperform from neutral. PT down 12% to $42
  • Charter Communications: Barclays adjusts price target to $700 from $725, keeps equal-weight rating
  • Eastman Chemical: J.P. Morgan downgrades to neutral from overweight. PT up 5.7% to $110
  • Glencore: Goldman Sachs lowers its target from GBP 4.70 to GBP 4.60. 
  • Intel: Northland Securities Inc raised the recommendation on Intel Corp. to market perform from underperform. PT set to $49. Intel average PT is $56.05.
  • International Paper: Jefferies downgrades to hold from buy. PT up 11% to $55
  • WestRock: Jefferies lowers stock to Hold From Buy, Price Target to $54 From $84
  • Kemper: Oppenheimer & Co upgrades to outperform from market perform. PT up 25% to $200
  • Monster Beverage: Redburn initiates coverage on monster beverage with neutral rating
  • Newell Brands: J.P. Morgan upgrades to overweight from neutral. PT set to $27, implies a 18% increase from last price. Newell Brands average PT is $28.08.
  • Shake Shack: Truist Securities raised the recommendation on Shake Shack Inc. Class A to buy from hold. PT lifted 30% to $90
  • Starbucks: Stephens lifts to overweight from equal-weight, price target to $130 from $118
  • The Boeing Company: JP Morgan maintains his Neutral opinion on the stock. The target price is set at 260 versus 265 USD.
  • The Hartford Financial Services: Barclays adjusts price target to $85 from $76, maintains overweight rating
  • TripAdvisor: Barclays cut the recommendation on TripAdvisor Inc. Class A to underweight from overweight. PT down 9% to $30
  • Unilever: Bernstein upgrades to Market Perform from Underperform

© MarketScreener.com 2021
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Stocks mentioned in the article
ChangeLast1st jan.
ALNYLAM PHARMACEUTICALS, INC. 0.09% 136.53 Delayed Quote.-19.56%
AMAZON.COM, INC. 1.33% 2890.88 Delayed Quote.-14.44%
AMDOCS LIMITED 0.21% 75.24 Delayed Quote.0.32%
AMGEN INC. -0.72% 226.08 Delayed Quote.1.22%
ATLASSIAN CORPORATION PLC 6.10% 300.27 Delayed Quote.-25.78%
AUSTRALIAN DOLLAR / US DOLLAR (AUD/USD) -0.63% 0.71417 Delayed Quote.-1.07%
BANK OF AMERICA CORPORATION -0.82% 44.55 Delayed Quote.0.97%
BRITISH POUND / US DOLLAR (GBP/USD) -0.48% 1.3489 Delayed Quote.0.17%
CANADIAN DOLLAR / US DOLLAR (CAD/USD) -0.57% 0.7908 Delayed Quote.0.40%
CHARTER COMMUNICATIONS, INC. 1.31% 577.13 Delayed Quote.-12.62%
EASTMAN CHEMICAL COMPANY -0.71% 119.24 Delayed Quote.-0.68%
EURO / US DOLLAR (EUR/USD) -0.15% 1.13238 Delayed Quote.-0.26%
GLENCORE PLC -5.32% 388.25 Delayed Quote.9.36%
HANG SENG -1.10% 24643.35 Real-time Quote.6.49%
INDIAN RUPEE / US DOLLAR (INR/USD) -0.34% 0.013402 Delayed Quote.0.10%
INTEL CORPORATION -0.19% 51.94 Delayed Quote.1.05%
INTERNATIONAL PAPER COMPANY 1.99% 48.23 Delayed Quote.0.66%
KEMPER CORPORATION 2.76% 60.22 Delayed Quote.-0.32%
LONDON BRENT OIL -1.76% 87.02 Delayed Quote.12.18%
MONSTER BEVERAGE CORPORATION 2.94% 88.14 Delayed Quote.-10.85%
MSCI CHINA (STRD) -1.86% 84.327 Real-time Quote.2.66%
MSCI CHINA A (STRD) 0.29% 2496.419 Real-time Quote.-3.71%
NEW ZEALAND DOLLAR / US DOLLAR (NZD/USD) -0.32% 0.6699 Delayed Quote.-1.90%
NEWELL BRANDS INC. 1.78% 23.41 Delayed Quote.5.31%
NXP SEMICONDUCTORS N.V. 1.56% 203.07 Delayed Quote.-12.22%
S&P 500 0.28% 4410.13 Delayed Quote.-7.73%
S&P GSCI CRUDE OIL INDEX -2.74% 456.5931 Delayed Quote.13.20%
SHAKE SHACK INC. 2.56% 65.31 Delayed Quote.-11.75%
STARBUCKS CORPORATION 1.86% 98.1 Delayed Quote.-17.66%
THE BOEING COMPANY -0.60% 204.2 Delayed Quote.2.05%
THE HARTFORD FINANCIAL SERVICES GROUP, INC. 1.82% 70.58 Delayed Quote.0.41%
TRIPADVISOR, INC. -2.95% 26.68 Delayed Quote.0.84%
UNILEVER PLC 7.31% 3943.5 Delayed Quote.-6.86%
WESTROCK COMPANY 2.53% 44.99 Delayed Quote.-1.08%
WTI -2.07% 84.053 Delayed Quote.11.56%
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