Since yesterday, the market is focused on earnings reports, since they have the power to move markets four times a year. And Netflix, Tesla and IBM, which published yesterday, did indeed negatively impact global indices after disappointing figures. From now on, earnings season is in full steam. If you're interested in the topic, you can access FactSet's reports every Friday, comparing the results of US companies that have published with analysts' forecasts and with the past. It's not always easy to digest, far from it, but it gives a good overview.

Yesterday on the stock market, there was something for everyone. The British FTSE 100, for example, rose by 1.8%, helped by lower-expected-inflation in the UK. There was a 0.1% drop for the Nasdaq 100, which sometimes falls, but not too much. While eyes are on corporate results right now, that will soon change since the Fed's monetary policy decision scheduled for July 26. The market is almost certain that a rate hike will take place. Some hope it will be the last one.

Today, we have the results of Johnson & Johnson, Abbott, Philip Morris and Intuitive Surgical, to name a few. Thursday is historically the preferred day for companies to announce their results. In the USA, Tesla was the first to publish among what the media now call the "Magnificent Seven", in reference to the John Sturges western, to unveil its figures. Four others are expected next week (Microsoft, Alphabet, Meta and Amazon), while the last two will keep their aficionados waiting until August.  Apple on August 3, but Nvidia won't publish until August 23, with a considerable emotional and financial charge since the graphics card supplier is the new barometer of artificial intelligence. The Magnificent Seven are the driving forces behind US indices.

This morning, the Dow Jones Futures is flat, the S&P 500 Futures is down 0.2% and the Nasdaq 100 dropped 0.7%, after weekly jobless claims inexpediently fell, highlighting the resilience of the US job market. Initial claims for state unemployment benefits dropped 9,000 to a seasonally adjusted 228,000 for the week ended July 15, the Labor Department said. Economists expected 242,000 claims.

I'd like to end this column with Bank of America's latest study on what's going on inside the heads of major asset managers. Every month, the bank quizzes the leading financial professionals who manage other people's money, to find out what they think. Most of the time, this gives us some insight into the psychology of the market, some amusing graphs and some pretty hard to interpret. For this report, note that these people were questioned between July 6 and 13.

Among the lessons learned, I have retained four:

  • The biggest fear is that inflation will remain high, forcing central banks to stay mean (45%). The rising scenario is that of a technology and/or artificial intelligence bubble (11%).
  • If there were to be a "credit event" - the cute term for a big, rotten bankruptcy with a domino effect - it would probably come from commercial real estate in the US or Europe (40%) or a big glitch in US shadow banking (21%). The term "shadow banking" covers institutions that are not regulated as strictly as banks, but which still handle billions, such as investment funds.
  • The Fed's first-rate cut is scheduled for...

*Q2 2024: 29%

*Q1 2024: 27%

*H2 2024: 26%

  • The most crowded bet at the moment is going long on big US technology stocks (59%), followed by going long on Japanese equities (14%) and short on Chinese equities (8%). I guess nobody's surprised.

Today's economic highlights:

Lots of statistics today, with the weekly US unemployment figures and the Philly Fed's activity index topping the agenda, as well as US housing figures. The full agenda is here. 

The dollar is up 0.2% against the euro to 0.8944 and up 0.6% against the pound to GBP 0.7777. The ounce of gold falls to USD 1972. Oil hasn't moved much since yesterday, with North Sea Brent at USD 79.64 a barrel and US light crude WTI at USD 75.51. The yield on 10-year US debt has reached 3.76%. Bitcoin is trading at USD 30,200.

In corporate news:

  • Tesla - The automaker's shares fell by 3.5% before the opening, as its CEO Elon Musk spoke of further price cuts for its electric cars, despite the fact that these have pushed the group's gross margins to a four-year low of 18.1%, compared with 26% a year ago, as calculated by Reuters.
  • Netflix lost 7% in pre-market trading, as its quarterly sales and earnings forecasts fell short of market expectations. The video-on-demand specialist reported second-quarter sales of $8.2 billion, below analysts' forecasts of $8.3 billion.
  • IBM - The group's second-quarter sales fell short of Wall Street expectations, as lower sales weighed on results. Total sales for the quarter ended June 30 fell by 0.4% to $15.48 billion, against analysts' average estimate of $15.58 billion, according to Refinitiv data.
  • United Airlines Holding raised its full-year earnings forecast on Wednesday, after posting record quarterly profits. The company expects adjusted earnings of $3.85 to $4.35 per share for the quarter, compared with the Wall Street consensus of $3.70. The stock climbed 2.4% in after-hours trading on Wednesday.
  • TSMC expects a 10% drop in sales in 2023, after reporting a 23% fall in second-quarter profit, as global economic difficulties reduced demand for chips. The share price fell by 2.7% in pre-market trading.
  • Johnson & Johnson gained 1.6% in premarket trading after raising its earnings forecast for 2023 and posting second-quarter earnings of $2.80 per share, compared with $2.62 expected by analysts.
  • American Airlines on Thursday raised its annual adjusted earnings forecast to a range of $3.00 to $3.75 per share, compared with $2.50 to $3.50 per share previously. The stock was up 2.2% before the market opened.
  • Travelers Companies reported a 98% drop in quarterly earnings on Thursday, as severe storms in parts of the US caused catastrophe losses to soar. The stock lost 1.5% in pre-market trading.
  • Blackstone is down 1.1% in premarket trading after a fall of almost 40% in distributable profits in the second quarter.
  • Discover Financial Services fell 13.4% after the close on Wednesday. The company reported lower-than-expected quarterly earnings and announced a pause in its share buybacks. Revenues, net of interest expense, came to $3.88 billion, compared with $3.2 billion in the same quarter of the previous year.
  • Zions Bancorporation on Wednesday reported a rise of around 7% in deposits during the second quarter and said income from borrowers had stabilized. The stock gained 7.5% in after-hours trading.
  • Philip Morris International was up 0.5% in pre-market trading after earnings beat expectations in the second quarter.
  • Newmont reported quarterly net earnings of $0.33 per share, against analysts' average estimate of $0.44 per share according to Refinitiv data. The share price is down 1.1% in premarket trading.

Analyst recommendations:

  • Activision Blizzard: Jefferies downgrades to hold from buy. PT up 3% to $95.
  • Alexandria Real Estate: Jefferies initiated coverage with a recommendation of buy. PT set to $142.
  • Antofagasta: Crédit Suisse remains neutral with a price target reduced from 1,550 to 1,350 GBp.
  • Avis Budget: Deutsche Bank downgrades to hold. PT up 9.8% to $263.
  • Cadence Design: Stifel upgrades to buy from hold. PT up 24% to $300.
  • First Horizon: Baird initiated coverage with a recommendation of neutral. PT set to $14.
  • Intel: Wolfe Research initiated coverage with a recommendation of underperform. PT set to $27.
  • IRobot: CICC initiated coverage with a recommendation of market perform. PT set to $38.46.
  • Qualcomm: Wolfe Research initiated coverage with a recommendation of outperform. PT set to $145.
  • Nvidia: Wolfe Research initiated coverage with a recommendation of outperform. PT set to $570.
  • Prologis: BNP Paribas Exane upgrades to outperform from neutral. PT up 15% to $141.
  • Skyworks: Barclays downgrades to equal-weight from overweight. PT up 0.4% to $115.
  • United Community Banks: Keefe, Bruyette & Woods downgrades to market perform from outperform. PT up 6.3% to $30.