Brent finally lost 10 dollars between its September 28 peak and the previous day's low of 85.72 dollars, half of this in yesterday's session alone. The spark came from the lowest seasonal demand for gasoline in 25 years in the United States. In response, OPEC+ announced that the self-imposed production cut by Saudi Arabia and Russia would continue at least until the end of the year.

The barrel rebounded slightly this morning, but Brent remains weak, below 86 dollars. What does this have to do with Wall Street yesterday? Cheaper oil reduces inflationary pressure, which relaxes investors who hate restrictive monetary policies, i.e. high interest rates.

The other factor that helped the market was the publication of the ADP employment report, which showed private sector employment in the US recorded a steepening decline in jobs, as well as a steady decline in wages in the past 12 months. In normal times, we'd be delighted to see a strong job market, but not right now, because that would mean that key interest rates have to be kept high to prevent inflation from taking off again. The sharp slowdown in job creation portrayed by ADP suggests that the September report, to be published on Friday, will be marked by a cooling of the US labor market. If confirmed, this would be a sign that the Fed will no longer have to raise rates. Hence the rise in equities yesterday, and the fall in bond yields after their surge.

When sensitivity is so high, data reliability is of paramount importance. This is particularly true of employment statistics. I mentioned the problem a few weeks ago in a column, and I'll come back to it today with an unambiguous assessment by the Wall Street Journal: there have never been so many revisions to job data. The first estimates provided on the first Friday after the end of the month are systematically wrong, and often by quite a margin. To give you an idea, over the first 8 months of 2023, the revisions concerned a cumulative total of 325,000 jobs, whereas the average over the previous ten years was around 16,000 per year, reports the WSJ. These discrepancies are clearly prompting some managers to focus their models on statistics that are rarely, if ever, adjusted in a second reading, such as PMIs, adds the publication. For all that, Friday's monthly report on US employment, or NFP for Non-Farm Payrolls, remains eagerly awaited by investors.

While US markets rebounded yesterday, Europe was left behind. It started the day in the red, before recovering fairly quickly during the session. But the rebound didn't really hold, and all ended lower except Frankfurt.

Futures on Wall Street were in the red this morning, with U.S. Treasury yields remaining high.

Fed officials Loretta Mester, Neel Kashkari and Mary Daly are due to speak today. Meanwhile, two candidates have applied to replace House Speaker Kevin McCarthy, which was ousted earlier this week: Steve Scalise, the chamber's No. 2 Republican, and Jim Jordan, who has been very vocal against Joe Biden.

Today's economic highlights:

Challenger layoffs and new jobless claims are on the agenda. 

The dollar is worth EUR 0.9509 and GBP 0.8243. The ounce of gold is down to USD 1815. Oil is also lower, with Brent North Sea crude at USD 85.23 a barrel and WTI US light crude at USD 83.59. The yield on 10-year US debt eased to 4.71%. Bitcoin trades USD 27,728.

In corporate news:

Amazon announced on Thursday that it was challenging the findings of Ofcom, the UK media regulator, which has asked the competition authority to investigate the cloud computing market in the UK, believing that the online retail giant and Microsoft are in a dominant position. For its part, the Windows publisher said it was working "constructively" with the UK competition regulator.

Apple has begun talks with DuckDuckGo to replace Google, a subsidiary of Alphabet, as the default search engine in private browsing mode on its Safari web browser, Bloomberg reported on Wednesday, citing sources close to the negotiations.

In Germany, Google has agreed to change its practices regarding user data to end an investigation, the German Cartel Office said on Thursday.

Exxon Mobil announced on Wednesday that it expects third-quarter operating income of between $8.3 and $11.4 billion, thanks to strong rises in oil, gas and fuel prices. The forecast profit is, however, lower than last year's for the same period.

Rivian Automotive - The electric vehicle manufacturer announced on Wednesday its intention to sell $1.5 billion worth of green convertible bonds, which should have a dilutive effect. Shares plunge 8.5% in pre-market trading.

Blackberry announced on Wednesday its intention to spin off its "Internet of Things" (IoT) and "cybersecurity" activities as part of an initial public offering (IPO) that could take place during the group's next fiscal year.

Clorox lost 4.6% in pre-market trading, as the household products manufacturer announced on Wednesday evening that it anticipated a 23% to 28% drop in sales in the current quarter compared with the previous one, due to a recent cyberattack.

Analyst recommendations:

  • Abrdn plc: Panmure Gordon & Co. Limited upgrades to buy from hold with a price target reduced from GBX 272 to GBX 250.
  • Advanced micro device: Baird maintains its outperform rating and reduces the target price from USD 170 to USD 125.
  • Amphenol: BNP Paribas Exane maintains its outperform recommendation with a target price of USD 93.
  • Best buy: Truist Securities maintains its hold recommendation with a price target reduced from USD 80 to USD 74.
  • Britvic plc: Kepler Cheuvreux downgrades to hold from buy with a price target reduced from GBX 1020 to GBX 930.
  • Carnival corp: Shore Capital downgrades to hold from sell.
  • Centerpoint ener: KeyBanc Capital Markets upgrades to overweight from sector weight with a target price of USD 29.
  • The Clorox Co: Raymond James downgrades to market perform from outperform.
  • Cms energy corp: KeyBanc Capital Markets upgrades to overweight from sector weight with a target price of USD 57.
  • Dollar general c: Truist Securities maintains its hold recommendation with a price target reduced from USD 142 to USD 117.
  • Dollar tree: Truist Securities maintains its buy recommendation and reduces the target price from USD 160 to USD 128.
  • Dte energy co: KeyBanc Capital Markets upgrades to overweight from sector weight with a target price of USD 106.
  • Entergy corp: KeyBanc Capital Markets upgrades to overweight from sector weight with a target price of USD 97.
  • Fortive corp: BNP Paribas Exane maintains its outperform recommendation with a target price of USD 91.
  • Genuine parts co: Truist Securities maintains its buy recommendation with a price target reduced from USD 191 to USD 172.
  • The Home depot: Truist Securities maintains its buy recommendation with a price target reduced from USD 372 to USD 341.
  • Idexx: Piper Sandler & Co maintains its overweight recommendation and reduces the target price from USD 600 to USD 520.
  • Lowe's: Truist Securities maintains its buy recommendation with a price target reduced from USD 256 to USD 235.
  • Nextera energy: KeyBanc Capital Markets downgrades to sector weight from overweight.
  • O'reilly automot: Citi upgrades to buy from neutral with a price target raised from USD 983 to USD 1040.
  • Target corp: Truist Securities maintains its hold recommendation with a price target reduced from USD 133 to USD 116.
  • Tesco plc: AlphaValue/Baader Europe maintains its add recommendation and reduces the target price from GBX 310 to GBX 306.
  • Tractor supply: Citi downgrades to neutral from buy with a price target reduced from USD 250 to USD 207.
  • Zoetis: Piper Sandler & Co maintains its overweight recommendation with a price target reduced from USD 220 to USD 210.