Last night, US equities failed to continue the timid rebound initiated the day before by tech stocks. The three main Wall Street indices fell by 0.19% for the Nasdaq 100, 0.28% for the S&P500 and 0.51% for the Dow Jones, after opening higher and then spending most of the session below the waterline.

Investors have high hopes for Nvidia's results, due later today, as it is supposed to become the mascot for the artificial intelligence era. An era whose contours, amplitude and consequences are still quite unclear, but which could become a jackpot for the sector's leading players. And in this context, Nvidia ticks all the boxes. To borrow a famous expression, during gold rushes, the merchants of shovels and pickaxes are notoriously better off than the prospectors. This may change over time, but in the initial phase, it's always the case. So, the shovels and picks are the high-performance processors. And in this field, Nvidia is clearly ahead of the competition.

As a result, Nvidia is so popular that it's one of those stocks whose valuation is correlated to narrative rather than traditional financial ratios. A bit like Tesla, for example. That's not to say that results don't matter, otherwise tonight's publication would be of no interest. But investors don't need to calculate realistic valuation multiples. What counts is the story that Nvidia's managers are going to tell, i.e., an infinite playground for their products and a medium-term trajectory that's probably indecipherable because it's so promising. Above all, they need to avoid snags, such as issuing a far too timid outlook or a lukewarm report below expectations.

Another important event this week will be the speech of Fed chair Jerome Powell at the Jackson Hole symposium on Friday. It carries particular weight because the event has become a must for central bankers wishing to send out a message. Secondly, its late-August timing sets the tone for the latter part of the year. And finally, after years of complacent monetary policies, the Western world has returned to a situation where money has a cost, which considerably changes the economic landscape. Traditionally, at least from what I've read, the Fed Chairman's speech in Jackson Hole leads to a rise in equity markets. That's for the statistical side, because last year, stock markets corrected in the wake of Jay Powell's prose. We’ll have to wait until Friday to find out more.

Financial news this session will be dominated by fresh PMI indicators from the major economies. The surveys were conducted up to mid-August. Japan was the first to report overnight, with a manufacturing PMI in line with expectations but uninspiring since it remains in the contraction zone, albeit fairly close to neutral (49.7 points). In the eurozone, business activity declined far more than expected in August, especially in Germany. The US PMI data is due later today.

US equity futures were little changed this morning ahead of the Nvidia earnings report.

Today's economic highlights:

PMIs across the major economies and US new home sales for July, as well as DOE crude inventories are on the agenda today. 

The dollar is up 0.2% against the euro to EUR 0.9245 and gained 0.7% against the pound to GBP 0.7913. The ounce of gold returns to USD 1905. Oil is down, with North Sea Brent at USD 82.32 a barrel and US light crude WTI at USD 77.92. The yield on 10-year US debt is 4.31%. Bitcoin is trading at around USD 25850.

In corporate news:

  • Nvidia shares were up 1.9% before the opening. The company is expected to publish its results after the close.
  • Macy’s is up 1% ahead of the opening after a sluggish demand outlook caused the stock to fall sharply on Tuesday.
  • Urban Outfitters - The clothing retailer gained 3.1% after the close, as the company posted second-quarter sales of $1.27 billion, against consensus of $1.25 billion, supported by stable demand for its apparel products despite persistently high inflation.
  • Chevron's Australian unit said on Wednesday it would increase its gas production capacity in Western Australia, as workers threatened a strike over wages and job security.
  • The U.S. Federal Trade Commission (FTC) is expected to open a full investigation Wednesday into Qualcomm's planned purchase of Israeli automotive chipmaker Autotalks, Politico reported Tuesday.
  • Grab is down 1.5% in pre-market trading, ahead of the release of its second-quarter results.
  • WeWork was down 3.8% in pre-opening trading, as trading in the company's 'warrants', speculative derivatives, was suspended.
  • Peloton was up 2.3% before the opening and before the publication of its fourth-quarter results.
  • AMC Entertainment is down 8.4% in pre-opening trading after the share closed at its lowest level since January 2021 on Tuesday.
  • Manchester United is up 11% in pre-market trading.
  • Full Truck Alliance is up 6.1% in pre-opening trading after a rise in second-quarter sales and earnings.
  • Advance Auto Parts is up 5.4% after announcing management changes.
  • Bath & Body Works fell by 6.9% before the opening, after the beauty and skin care products company forecast earnings for fiscal 2023 below consensus. The group expects adjusted earnings per share of between $2.80 and $3.10, compared with analysts' estimate of $3.16.
  • Foot Locker is down 17% after lowering its sales and earnings forecasts for 2023.

Analyst recommendations:

  • Antofagasta plc: Peel Hunt maintains its Hold recommendation with a price target reduced from 1435 to 1400 GBp.
  • Brown-Forman: Morgan Stanley raised its recommendation on Brown-Forman Corp. Class B to overweight from underweight. PT up 12% to $75.
  • Dick's Sporting Goods: Wells Fargo Securities cut the target on Dick's Sporting Goods Inc. to $115 from $140. Maintains equal-weight rating.
  • Dollar General: Raised to Buy at Edward Jones
  • Dominion Energy: Barclays initiated coverage with a recommendation of equal-weight. PT set to $52.
  • Duke Energy: Barclays initiated coverage with a recommendation of overweight. PT set to $96.
  • FirstEnergy: Barclays initiated coverage with a recommendation of equal-weight. PT set to $37.
  • Lowe's: Piper Sandler raised the target to $262 from $230. Maintains overweight rating.
  • Pennon group: RBC Capital maintains its sector perform recommendation with a price target reduced from 975 to 825 GBp.
  • PG&E: Barclays initiated coverage with a recommendation of overweight. PT up 13% to $19.
  • Premier: Piper Sandler downgrades to neutral from overweight. PT up 4% to $25.
  • Prudential plc: Deutsche Bank maintains its buy recommendation with a price target reduced from 1550 to 1540 GBp.
  • Rotork plc (ror ln): Peel Hunt maintains its buy recommendation with a price target raised from 350 to 380 GBp.
  • Sempra: Barclays initiated coverage with a recommendation of overweight. PT jumps 119% to $156.
  • Severn trent: RBC Capital maintains its sector perform recommendation with a price target reduced from GBp 3,000 to 2,650.
  • Southern: Barclays initiated coverage with a recommendation of equal-weight. PT up 0.4% to $68.
  • Sse plc: RBC Capital maintains its Outperform recommendation with a price target reduced from 20.50 to 19.50 GBp.
  • Synthomer plc: Morgan Stanley maintains its recommendation at "Equalwt/In-Line" with a price target reduced from GBp 140 to GBp 90.
  • Tullow oil: Stifel maintains its "Hold" recommendation with a price target reduced from GBp 41 to GBp 39.
  • United utilities: RBC Capital maintains its sector perform recommendation with a price target reduced from GBp 1100 to GBp 1075.
  • WEC Energy: Barclays initiated coverage with a recommendation of underweight. PT set to $83.
  • Wpp plc (wpp ln): AlphaValue/Baader Europe maintains its Buy recommendation with a price target reduced from GBp 1005 to GBp 959.