The S&P 500 and the Nasdaq 100 are on track for their worst week since October and September, respectively. Yesterday, Wall Street remained in the red, even if the Dow Jones picked up a few points. The S&P500 fell for the fourth time in a row and the Nasdaq 100 for the fifth. Not much, but the sum of the last few sessions is beginning to weigh. The Nasdaq 100 has lost 3.7% since flirting with 17,000 points on December 27. A few days ago, some investors had a hunch that the market would revise its over-optimism regarding the pace of rate cuts. This is exactly what happened. The publication of the minutes of the Fed's last meeting, followed by stronger-than-expected macroeconomic statistics on the US job market, prompted financiers to review their bets on monetary policy.

They are now a little better aligned with the calls from US central bankers not to get carried away. The bond market took note of this small turnaround by raising the US 10-year yield to 4%, the first time this has happened since mid-December. The cat-and-mouse game between the Fed and the market will continue over the next few days, as statistics come in, starting with the official non-farm payrolls report, released today at 8:30 am ET.

Economists expected U.S. job growth to have moderated in December, while the increase in annual wages was forecast to have slowed to below 4%.

But the data came in higher than expected. Non-farm payroll rose by 216k month-on-month, while a 175k rise was expected in a Bloomberg consensus. The unemployment rate remained unchanged at 3.7%, instead of 3.8% expected. Over the past 12 months, average hourly earnings have increased by 4.1 percent.

These figures, while positive for the economy, reinforce the current feeling that the Fed will remain vigilant about a possible upturn in inflation and will think twice before cutting rates. Traders have dialed back rate cut expectations and now see a 64.6% chance for at least a 25 basis points (bps) rate cut in March, down from nearly 86% a week ago, according to the CME FedWatch Tool.

Inflation in Europe was also on the agenda today with the December data. Yesterday's statistics from France and Germany eased the suspense: inflation continues to fall, giving the ECB more leeway to act on rates.  Year-on-year inflation in the eurozone rose by 2.9% year-on-year last month, after +2.4% in November. This is slightly below expectations.

In Asia Pacific this morning, the Nikkei 225 gained 0.3% in Tokyo. China had pretended to bounce back, but indices fell back into the red during the session. South Korea is still struggling (-0.4%), while India and Australia are not far from equilibrium, with Bombay in the green and Sydney in the red. European leading indicators are bearish today.

Today's economic highlights:

Eurozone inflation, US employment data, as well as US durable goods orders and ISM services are on the agenda today.

The dollar is slightly up to EUR 0.9158 and GBP 0.7894. The ounce of gold stagnates at USD 2040. Oil remains close to its recent levels, with North Sea Brent at USD 78.27 a barrel and US light crude WTI at USD 73.18. The yield on 10-year US debt is back up to 4%. Bitcoin is trading at USD 43,900.

In corporate news:

  • Tesla is down 1% in premarket trading, as the electric vehicle manufacturer is set to recall 1.62 million vehicles in China, the market regulator (China State Administration for Market Regulation) announced on Friday.
  • Apple gave up 0.8% in pre-market trading, its main subcontractor Foxconn having announced that it anticipates a drop in first-quarter sales in the wake of the slowdown in demand observed in the fourth quarter.
  • Exxon Mobil warned on Thursday that it would write down around $2.5 billion of California assets in the fourth quarter, and said that lower energy prices could cut its annual operating profit by around $8.9 billion, compared with $12.7 billion a year ago.
  • CVS Health announced Friday that 2024 enrollments for some of its Medicare Advantage programs, which provide health insurance to people aged 65 and over, exceeded its expectations.
  • Applied Therapeutics plunged 29% in pre-market trading as its treatment for heart disease showed disappointing results in a late-stage trial.
  • Voyager Therapeutics is down 16.1% in premarket trading after selling 11.1 million shares on Thursday, raising $100 million.
  • Brookfield Asset Management announced on Friday the purchase of the loss-making Indian operations of American Tower for $2.5 billion, becoming the country's largest telecom tower operator amid booming data demand and increased use of 5G services.
  • Thermo Fisher Scientific has pledged to stop selling forensic technologies and equipment in Tibet that could be used to identify individuals, said a company spokesperson.

Analyst recommendations:

  • Advanced Micro Devices : Mizuho Securities maintains its buy recommendation and raises the target price from USD 130 to USD 162.
  • Avalonbay Communities : KeyBanc Capital Markets downgrades to sector weight from overweight.
  • Barratt Developments : Redburn Atlantic maintains its neutral recommendation with a price target raised from GBX 500 to GBX 600.
  • Boeing : Wells Fargo maintains its overweight rating and raises the target price from USD 230 to USD 280. Vertical Research Partners maintains its hold recommendation with a price target raised from USD 215 to USD 266.
  • Broadcom : Mizuho Securities maintains its buy recommendation and raises the target price from USD 1000 to USD 1250.
  • Burberry Group : Kepler Cheuvreux maintains its hold recommendation and reduces the target price from GBX 1500 to GBX 1400.
  • Cloudflare : Jefferies maintains its hold recommendation and raises the target price from USD 60 to USD 80.
  • Coinbase Global : Cowen maintains its underperform recommendation and raises the target price from USD 39 to USD 75.
  • Cognizant Technology Solutions : Societe Generale downgrades to sell from hold with a target price of USD 67.
  • Equifax : BNP Paribas Exane maintains its underperform recommendation and raises the target price from USD 165 to USD 210.
  • Experian : BNP Paribas Exane upgrades to outperform from neutral with a price target raised from GBX 2950 to GBX 3800.
  • Hubspot : Jefferies maintains its buy recommendation and raises the target price from USD 515 to USD 620.
  • Ibm : Societe Generale downgrades to sell from hold with a target price of USD 143.
  • Lam Research Corporation : Mizuho Securities maintains its buy recommendation and raises the target price from USD 700 to USD 900.
  • MSCI : Raymond James downgrades to market perform from outperform.
  • Next : AlphaValue/Baader Europe downgrades to reduce from add with a price target reduced from GBX 8689 to GBX 8686. HSBC downgrades to hold from buy with a price target raised from GBP 86 to GBP 88.40.
  • Okta : Jefferies downgrades to hold from buy with a price target raised from USD 85 to USD 95.
  • Palantir Technologies : Jefferies downgrades to underperform from hold with a price target reduced from USD 18 to USD 13.
  • Palo Alto Networks : Jefferies maintains its buy recommendation and raises the target price from USD 285 to USD 350.
  • Paycom Software : Jefferies downgrades to hold from buy with a target price of USD 195.
  • Pnc Financial Services Group : Citigroup maintains its buy recommendation and raises the target price from USD 145 to USD 175.
  • Seagate Technology Holdings : Mizuho Securities maintains its buy recommendation and raises the target price from USD 70 to USD 100.
  • Tesco : AlphaValue/Baader Europe downgrades to reduce from add with a price target reduced from GBX 321 to GBX 320.
  • Transunion : BNP Paribas Exane maintains its outperform recommendation and raises the target price from USD 65 to USD 79.
  • United Rentals : BNP Paribas Exane downgrades to underperform from outperform with a price target reduced from USD 525 to USD 485.
  • Unilever : AlphaValue/Baader Europe maintains its accumulate recommendation with a price target raised from 4587 to GBX 4663.
  • Zscaler : Jefferies maintains its buy recommendation and raises the target price from USD 225 to USD 275.