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.

US inflation figures and earnings reassure investors

01/28/2022 | 09:55am EDT
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After the Fed took a tougher stance than expected on monetary policy, investors are turning to corporate earnings for comfort. Apple cheered them up, as the Californian firm achieved record sales. Prior to that, U.S. technology stocks had posted their 8th day of losses in 10 sessions. However, there was some good news today with US inflation figures.

The core personal consumption expenditure price index, often touted as the Fed’s preferred gauge to measure inflation, was in line with expectations, which reassured investors that the Fed would not turn too hawkish. It gained 0.5% for the month of December, as forecast by economists. Overall, inflation accelerated 4.9% year-on-year in December, the biggest rise since 1983.

Will this be enough to reverse the course of indexes? Since January 1, the Nasdaq 100 has lost 13% and the S&P500 8.7%. Yesterday, Wall Street lost more ground, especially the Nasdaq 100, which will have to work hard today if it wants to catch up with its weekly deficit of 3%. The week before, the Nasdaq 100 lost 7.5%. This index is the bellwether of US stock market, and its stars also weigh heavily in the broader S&P500 index. And in this respect, yesterday's session was very instructive. The technology index gave back 1.2%, with two big leaders in this contraction, Tesla (which sank by 11.5% after announcing that it was not immune to component shortages) and Nvidia (-3.6% because the star of the fall 2021 no longer looks like a must-have). I can add the entire semiconductor segment, including Intel and Advanced Micro Devices, which fell 7% but weigh less than the two aforementioned players.

On the other hand, the aristocrats of the index were not swept away this time. Microsoft gained ground and Apple and Google finished almost flat. The results of the owner of Windows were reassuring, as were Apple's results last night after the close.

As you may have noticed, the Fed didn't provide much reassurance on Wednesday. Economists generally took note of a rather soft written communication from the institution, but a more conservative and tighter tone from its chairman Jerome Powell in the press conference that followed. "They know they're behind, and in response they're announcing that they're going to go ahead and do what's necessary and still have plenty of room to act aggressively. But not for six weeks on rates and 18 weeks before they start to reduce the balance sheet," summarizes Steven Blitz of TS Lombard. This gives investors a little more time to prepare.

Meanwhile, corporate results continue to offer some guarantees. After the modern stars yesterday, the old economy is back to close the week, with Chevron and Caterpillar.

 

Economic highlights of the day:

The US consumer is in the spotlight with the December US household income and spending figure and the January University of Michigan consumer confidence index are on the agenda today. This morning, France reported a higher-than-expected 0.7% quarterly growth in Q4, bringing GDP growth to 7.0% year-over-year.

The dollar is down to 0.8964. The ounce of gold fell back below the USD 1,800 mark to 1788. Oil consolidated at high levels, with Brent crude at USD 90.95 and WTI at USD 88.27. US debt yields are down to 1.82% over 10 years. Bitcoin is stabilizing around USD 37,080.

 

On markets:

* Apple on Thursday reported better-than-expected revenue and net income for the October-December quarter last year, as strong iPhone sales, particularly in China, more than offset supply chain challenges. The stock gained 4% in pre-market trading.

* Caterpillar warned that its operating margin for the current quarter could be hurt by higher production and labor costs, sending the stock down 1.6% in pre-market trading.

* Chevron reported a lower-than-expected fourth-quarter profit on Friday, despite strong growth in oil and gas prices. The stock lost 3% in premarket trading.

* Philips 66 - The refining company posted a fourth-quarter profit, compared with a loss in the same period in 2020, thanks to a rebound in demand.

* Visa reported a better-than-expected quarterly profit on Thursday, as increased travel and online shopping drove higher spending volumes. The global payment card giant is up 4.6 percent in pre-market trading.

* Mondelez International said Thursday that supply chain issues are expected to have a greater impact this quarter on its North American business after it reported a 37% drop in gross margin in the fourth quarter. The stock is down 3.5% in pre-market trading.

* VF Corp, owner of the Vans brand, lowered its annual sales forecast due to delivery delays and labor shortages at its Vietnamese factories.

* Biogen announced Friday that it will sell its entire stake in Samsung Bioepis to Samsung Biologics for 2.8 trillion won.

* 3M Company should pay $110 million to two U.S. military veterans who claimed that the company's earplugs caused them hearing damage, the courts said Thursday.

* Western Digital - The U.S. technology company fell 12.8% in premarket trading after reporting a third-quarter revenue forecast that fell short of market expectations.

* Citigroup to sell its Taiwan retail business to BS Group for S$956 million.

* Alphabet - Google announced Friday that it will invest up to $1 billion in Indian telecom operator Bharti Airtel.

* The Home Depot announced Thursday the appointment of Edward Ted Decker as chief executive officer in place of Craig Menear, who will remain president.

* Robinhood - The online brokerage reported Thursday a net loss of $423 million in the last three months of 2021, compared with a profit in the same period a year earlier. The stock fell 14.6 percent in pre-market trading.

 

Analyst recommendations:

Associated British Foods: Goldman Sachs downgrades from neutral to sell targeting GBp 2060.
AT&T: UBS adjusts PT to $32 from $34, maintains Buy rating
CarMax: Citic Securities initiated coverage with a recommendation of buy. PT set to $130.
Corning: UBS adjusts PT to $49 from $51, maintains Buy rating
Crown Castle: Raymond James upgrades to outperform from market perform. PT up 7.2% to $184.
Electronic Arts: KeyBanc adjusts Electronic Arts' PT to $165 from $180, reiterates Overweight rating.
General Electric: DZ Bank adjusts PT for General Electric to $125 from $135, maintains Buy rating
Intel: UBS adjusts Intel's PT to $53 from $58, maintains Neutral rating
Kimberly-Clark: Goldman Sachs lowers PT to $130 from $142, maintains Neutral rating
Las Vegas Sands: Stifel adjusts PT to $56 from $51, maintains Buy rating
Nasdaq 100: Morgan Stanley lowers Nasdaq's PT to $238 from $252, maintains Overweight rating
Polymetal: Ehrenberg remains Buy with a price target reduced from GBp 2200 to GBp 1500.
ResMed: RBC Capital Markets raised the recommendation to sector perform from underperform.PT up 7.2% to $241
Teradyne: Deutsche Bank downgrades to hold from buy. PT up 7.9% to $120
The Boeing Company: Goldman Sachs raises PT to $307 from $300, maintains Buy rating
Truist Financial: Stephens Raises Price Target for Truist Financial to $75 From $73.50, Maintains Overweight Rating
Verizon Communications: DZ Bank lowers PT to $55 From $58, maintains Hold rating
YouGov: Peel Hunt upgrades to buy from add. PT up 29% to 1,630 pence


© MarketScreener.com 2022
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Stocks mentioned in the article
ChangeLast1st jan.
3M COMPANY 1.06% 148.56 Delayed Quote.-17.22%
ADVANCED MICRO DEVICES, INC. 2.81% 101.52 Delayed Quote.-31.38%
ALPHABET INC. 3.63% 2232.96 Delayed Quote.-25.58%
APPLE INC. 3.32% 148.5745 Delayed Quote.-19.03%
ASSOCIATED BRITISH FOODS PLC 0.73% 1736 Delayed Quote.-14.17%
AT&T INC. -0.52% 21.215 Delayed Quote.14.76%
AUSTRALIAN DOLLAR / US DOLLAR (AUD/USD) 0.75% 0.71511 Delayed Quote.-2.35%
BHARTI AIRTEL LIMITED -1.24% 684.75 End-of-day quote.0.13%
BIOGEN INC. 0.42% 205.05 Delayed Quote.-14.88%
BITCOIN (BTC/EUR) -1.51% 27209.9 End-of-day quote.-35.26%
BITCOIN (BTC/USD) -0.65% 29315.8 End-of-day quote.-38.59%
BRITISH POUND / US DOLLAR (GBP/USD) 0.01% 1.2617 Delayed Quote.-6.98%
CANADIAN DOLLAR / US DOLLAR (CAD/USD) 0.29% 0.785 Delayed Quote.-1.39%
CARMAX, INC. 0.13% 99.335 Delayed Quote.-23.86%
CATERPILLAR INC. 1.23% 215.59 Delayed Quote.3.02%
CHEVRON CORPORATION 0.74% 177.79 Delayed Quote.50.48%
CITIC LIMITED 3.25% 8.9 Delayed Quote.11.95%
CITIC SECURITIES COMPANY LIMITED -0.05% 19.61 End-of-day quote.-25.75%
CITIGROUP INC. -1.56% 53.245 Delayed Quote.-10.43%
CORNING INCORPORATED 1.63% 35.51 Delayed Quote.-9.48%
CROWN CASTLE INTERNATIONAL CORP. 3.11% 193.355 Delayed Quote.-10.16%
DEUTSCHE BANK AG -0.21% 10.392 Delayed Quote.-5.48%
ELECTRONIC ARTS INC. -0.17% 138.365 Delayed Quote.5.14%
EURO / US DOLLAR (EUR/USD) -0.08% 1.07221 Delayed Quote.-6.01%
GENERAL ELECTRIC COMPANY 1.16% 77.9 Delayed Quote.-18.48%
INDIAN RUPEE / US DOLLAR (INR/USD) 0.04% 0.012884 Delayed Quote.-3.94%
INTEL CORPORATION 1.95% 44.323 Delayed Quote.-15.57%
KIMBERLY-CLARK CORPORATION 0.40% 132.93 Delayed Quote.-8.08%
LAS VEGAS SANDS CORP. 0.51% 34.34 Delayed Quote.-9.22%
LONDON BRENT OIL 1.81% 119.59 Delayed Quote.46.84%
MICROSOFT CORPORATION 1.82% 270.73 Delayed Quote.-20.94%
MONDELEZ INTERNATIONAL, INC. 1.36% 63.33 Delayed Quote.-5.75%
MORGAN STANLEY 0.79% 85.66 Delayed Quote.-13.41%
MSCI TAIWAN (STRD) 2.89% 614.431 Real-time Quote.-18.86%
NASDAQ 100 2.67% 12606.87 Real-time Quote.-24.77%
NASDAQ COMP. 2.70% 12060.48 Real-time Quote.-24.96%
NEW ZEALAND DOLLAR / US DOLLAR (NZD/USD) 0.78% 0.65306 Delayed Quote.-5.22%
NVIDIA CORPORATION 4.58% 186.635 Delayed Quote.-39.31%
RAYMOND JAMES FINANCIAL, INC. 2.22% 98.215 Delayed Quote.-4.25%
RESMED, INC. 2.88% 207.76 Delayed Quote.-22.43%
ROBINHOOD MARKETS, INC. 11.53% 10.3589 Delayed Quote.-47.75%
S&P 500 1.82% 4132.06 Real-time Quote.-14.86%
S&P GSCI BRENT CRUDE INDEX 0.86% 979.7458 Real-time Quote.46.79%
S&P GSCI CRUDE OIL INDEX 0.82% 630.3845 Real-time Quote.51.70%
SAMSUNG ELECTRONICS CO., LTD. 0.91% 66500 End-of-day quote.-15.07%
TERADYNE INC. 3.39% 108.515 Delayed Quote.-35.83%
TESLA, INC. 6.35% 753.5227 Delayed Quote.-33.03%
THE BOEING COMPANY 2.83% 131.36 Delayed Quote.-39.37%
THE HOME DEPOT, INC. 0.84% 305.395 Delayed Quote.-27.04%
TRUIST FINANCIAL CORPORATION 0.92% 48.86 Delayed Quote.-17.32%
UBS GROUP AG 1.35% 17.985 Delayed Quote.8.07%
VERIZON COMMUNICATIONS 0.35% 51.155 Delayed Quote.-1.39%
VF CORPORATION 2.34% 50 Delayed Quote.-33.26%
VISA, INC. 1.54% 211.77 Delayed Quote.-3.77%
WESTERN DIGITAL 1.91% 61.86 Delayed Quote.-6.95%
WTI 0.98% 115.2 Delayed Quote.46.90%
YOUGOV PLC 8.08% 1237.5 Delayed Quote.-28.44%
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