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.

Wall Street opens in the green ahead of Fed minutes

07/06/2022 | 09:37am EDT
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Wall Street indexes had mixed performances yesterday. At the close, the Nasdaq was up 1.7% after losing a lot of ground at the start of the day, while the Dow Jones lost 0.4% at the end of the session. The gap is explained by the heavy fall in oil stocks as Brent crude fell 10%, and by a shift to technology and cyclical stocks.

Investors are concerned about inflation and the slowing global economy, but rumors that the Biden administration Is looking to remove some extra tariffs on Chinese goods is giving them reasons to hope, as it would alleviate inflationary pressure. This is the reason why yesterday’s session was very wobbly. Investors got rid of their recent favorites - oil, banking and industrial stocks - to pick up a few technology bets.

Oil took a hit yesterday. The barrel of Brent suddenly lost more than 10% during the session, causing WTI to fall back below USD 100. Black gold is caught up in fears of economic slowdown, fears that are also visible in the trajectory of industrial metals, which are also down. The S&P index, which measures a basket of aluminum, copper, lead, nickel and zinc, has lost 25% since the start of the Russian offensive in Ukraine in late February. At the same time, agricultural products have fallen by 15%. This means that the threat of recession is weighing more heavily than geopolitical tensions on supply at the moment.

In other news, while the United States seems ready to ease tariffs on China, it does not seem ready to give up its technological sovereignty, as it is reportedly pushing for groups like ASML to stop exporting semiconductor production equipment to China. Rumors are also circulating about a possible ceasefire that could be negotiated by Moscow if its armies emerge victorious from the Donbass campaign.

Wall Street’s main indexes are slightly up at the open. All eyes are on the release of the minutes of the last Fed meeting later today. Fed officials made it clear that more aggressive rate hikes are on the way, and traders are now expecting another 75-basis-point rate hike by the end of the month. The U.S. Treasury yield curve inverted for a second consecutive day on Wednesday, which is one of the warning signs of a recession.

 

Economic highlights of the day:

On the agenda, we have the JOLTS job openings survey and the ISM services index at 10:00 am, followed by the release of the minutes of the last Fed meeting at 2pm. All the macro agenda here.

The dollar wakes up against the euro and trades at EUR 0.9808. The ounce of gold plunges to USD 1767. Oil’s decline continues, with North Sea Brent at USD 103.50 per barrel and US WTI light crude at USD 99.64, down about USD 10 from the previous day's prices. The yield on 10-year U.S. debt fell back to 2.83% while short maturities tended to rise, with a 6-month at 2.51%. Bitcoin is trading around USD 20,000.

 

On markets:

* Tesla - The U.S. automaker sold about 78,000 vehicles produced in China in June, up 142 percent from May, according to preliminary data released Wednesday by the China Passenger Car Association (CPCA), the industry federation.

* Amazon - The U.S. online retail giant has taken a 2 percent stake in Grubhub, the U.S. subsidiary of Just Eat Takeaway.com, and signed a business agreement with the group that will give Amazon Prime members free access to its meal delivery service for one year.

* Uber Technologies and Doordash are down 2.8% and 6.5% respectively in pre-market trading, while Amazon is down 0.2%, as the group is under investigation in the UK for anti-competitive practices on its marketplace, while in Germany, the Federal Cartel Office has ruled that it enjoys a dominant position in this segment.

* Walmart will charge some of its suppliers new fees for transporting goods to its warehouses and stores starting in August because of rising costs, according to a note seen by Reuters.

* Twitter on Tuesday decided to challenge government orders to remove content from its platform in an Indian court, saying it was an abuse of power, a source close to the case said.

* Altria Group is up 2.6% in pre-market trading after the U.S. Food and Drug Administration (FDA) decided Tuesday night to temporarily lift its order banning the sale of electronic cigarettes from Juul Labs, a subsidiary of the group, pending further review.

* Voyager Digital - The cryptocurrency broker announced Wednesday that it had filed for bankruptcy in the United States, a week after suspending withdrawals, exchanges and deposits on its platform.

 

Analyst recommendations:

  • A. O. Smith Corp: Longbow Research upgrades to buy from neutral. PT up 24% to $71.
  • Abbott Laboratories: Wolfe Research initiated coverage with a recommendation of underperform. PT set to $95.
  • Avid Technology: J.P. Morgan reinstated coverage with a recommendation of overweight. PT set to $33.
  • Boston Scientific: Wolfe Research initiated coverage  with a recommendation of outperform. PT set to $43.
  • Callon Petroleum: RBC Capital Markets upgrades to outperform from sector perform. PT jumps 109% to $75.
  • Continental Resources: RBC Capital Markets downgrades to sector perform from outperform. PT up 25% to $80.
  • Costco Wholesale: Evercore ISI lowers Price Target to $520 from $535, maintains Outperform rating.
  • Earthstone: RBC Capital Markets downgrades to sector perform from outperform. PT rises 69% to $21.
  • EOG Resources: RBC Capital Markets downgrades to sector perform from outperform. PT up 43% to $150.
  • Intertek: Jefferies downgrades from buy to hold saying GBp 4700.
  • Littelfuse: Baird cut the recommendation to neutral from outperform. PT up 7.2% to $269.
  • Medtronic: Wolfe Research initiated coverage with a recommendation of underperform. PT set to $85.
  • Pioneer Natural: RBC Capital Markets downgrades to sector perform from outperform. PT up 35% to $290.
  • Sage: Barclays moves from Underweight to Equal-Weight targeting GBp 720.
  • Teleflex: Wolfe Research initiated coverage with a recommendation of outperform. PT up 19% to $300.
  • Valero Energy: Barclays raises Price Target to $133 from $120, maintains Overweight rating.

© MarketScreener.com 2022
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Stocks mentioned in the article
ChangeLast1st jan.
A. O. SMITH CORPORATION 1.17% 62.42 Delayed Quote.-27.29%
ABBOTT LABORATORIES 0.20% 110.49 Delayed Quote.-21.49%
ALTRIA GROUP, INC. 0.87% 45.13 Delayed Quote.-4.77%
AMAZON.COM, INC. -1.44% 140.64 Delayed Quote.-15.64%
AVID TECHNOLOGY, INC. 2.58% 27.84 Delayed Quote.-14.52%
BOSTON SCIENTIFIC CORPORATION -0.24% 41.76 Delayed Quote.-1.69%
CALLON PETROLEUM COMPANY 6.97% 40.67 Delayed Quote.-19.53%
CONTINENTAL RESOURCES, INC. 1.39% 68.57 Delayed Quote.53.19%
COSTCO WHOLESALE CORPORATION -1.41% 532.2 Delayed Quote.-4.91%
DOORDASH, INC. -3.36% 77.89 Delayed Quote.-47.69%
EARTHSTONE ENERGY, INC. 5.62% 14.67 Delayed Quote.34.10%
EOG RESOURCES, INC. 4.17% 113.54 Delayed Quote.27.82%
INTERTEK GROUP PLC -0.38% 4217 Delayed Quote.-25.10%
LITTELFUSE, INC. -0.88% 248.8 Delayed Quote.-20.94%
MEDTRONIC PLC -0.14% 94.04 Delayed Quote.-9.10%
PIONEER NATURAL RESOURCES COMPANY 4.90% 228.48 Delayed Quote.19.75%
SAGE GROUP PLC 0.16% 742.6 Delayed Quote.-12.90%
TELEFLEX INCORPORATED -0.07% 253.87 Delayed Quote.-22.71%
TESLA, INC. -2.62% 859.89 Delayed Quote.-18.63%
TWITTER, INC. -1.10% 43.94 Delayed Quote.1.67%
UBER TECHNOLOGIES, INC. -1.71% 32.24 Delayed Quote.-23.11%
VALERO ENERGY CORPORATION 2.08% 114.09 Delayed Quote.51.90%
VOYAGER DIGITAL LTD. 0.00% 0.335 Delayed Quote.-97.88%
WALMART INC. 0.96% 129.82 Delayed Quote.-10.28%
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