While investors have fully priced in a probability that the Fed will hold rates steady in the December meeting, they see a 48% chance that a rate cut will happen as soon as May 2024, according to CME Group's FedWatch tool.

Yesterday, Wall Street booked its 12th gain in the last 14 sessions, giving an idea of just how much buying has been going on since traders became almost convinced that the Fed would start cutting rates in six to eight months' time. Since January 1, the Nasdaq 100 has posted gains of 44.6%, closing to within 6% of its all-time record of almost two years to the day. The tech index lost 38% between its November 2021 peak and its October 2022 low. To return to this level, it needs to recover just over 60%. This means it is already five-sixths of the way there.

U.S. indices, however, moderated their enthusiasm a little yesterday, after the jubilant surge of recent sessions. The S&P500 gained 0.16%, the Dow Jones 0.5% and the Nasdaq, almost at the union minimum, 0.03%. The most popular index of the day, the Russell 2000, which tracks small US companies that benefit greatly from an improving interest-rate environment, fell back into line with a 0.2% rise, following a 5.4% surge the previous day.

The pace of earnings releases is slowing, although a few big names are still due to release their results, including today with Walmart, Cisco and Palo Alto. Target's good figures yesterday set the bar pretty high. In fact, the stock soared by 17.8% at the close, proving you can also find wild swings in good old-fashioned defensive stocks. Of course, this requires a strong decorrelation between market expectations and reality, as well as a climate somewhat conducive to investors pulling their punches.

The four-hour meeting between Joe Biden and Xi Jinping in San Francisco resulted in a few compromises, with soothing words like "the planet is big enough for our two countries to prosper" from the Chinese leader, and the maintenance of disagreements over Taiwan. No big surprises here. Xi told the business leaders gathered there that China has no intention of engaging in a hot cold war with anyone. However, there was some tensions since Joe Biden ended his press conference by calling Xi a "dictator", an adjective that he first used in June. There is dialogue, even "progress" according to Biden, but it seems clear the prospect of a real rapprochement between the two countries is not imminent. It's worth noting that Xi dined with a number of big names from the business world, including Apple boss Tim Cook and Larry Fink, his counterpart at BlackRock.

In other news, the U.S. Senate has approved the draft text that will prevent a shutdown of the U.S. administration on November 17. The risk of a shutdown has thus been averted, even if the market, in its euphoria of the moment, seemed to have forgotten that such a risk existed.

Today, some new data confirmed that the US economy is slowing, another sign that rate hikes might be over. The number of Americans filing new claims for unemployment benefits increased more than expected last week. They increase by 13,000 to 231,000 for the week ended November 11, the Labor Department said. Economists polled by Reuters expected 220,000 claims.

Some Fed Policymakers are due to speak during the day, including New York Fed President John Williams and Fed Vice Chair for Supervision Michael Barr, which should give some clues about the Fed’s monetary policy.

Economic highlights of the day:

US weekly employment data, the Philadelphia Fed index, industrial production and the NAHB house price index are on the agenda. 

The dollar is worth EUR 0.9192 and GBP 0.8041. The ounce of gold is trading at USD 1972. Oil falls again, with North Sea Brent at USD 80.32 a barrel and US light crude WTI at USD 75.76. The yield on 10-year US debt reached 4.50%. Bitcoin is trading at around USD 36,500.

In corporate news:

  • Walmart on Thursday raised its sales and annual profit forecasts for the second consecutive quarter, signaling a good start to the holiday season. Walmart now expects fiscal 2024 earnings per share of between $6.40 and $6.48, compared with a previous forecast of $6.36 to $6.46. The company reported third-quarter adjusted earnings of $1.53 per share, against a consensus of $1.52.
  • Cisco Systems cut its annual sales forecast on Wednesday, in a sign that demand for its networking equipment is slowing. For the full year, the company said it expected sales of between $53.8 and $55.0 billion, compared with its previous forecast of between $57.0 and $58.2 billion. The share price was down 10.1% in after-hours trading.
  • Exxon Mobil - The oil major plans to invest up to $15 billion in a petrochemical project and carbon capture and storage facilities in Indonesia, the country's president, Joko Widodo, said in a statement on Thursday.
  • Crispr Therapeutics - US-listed shares in the Swiss genetic engineering company rise 5.28% after the company and its partner Vertex Pharmaceuticals announce that the UK health regulator has granted conditional marketing authorization for a gene therapy to treat blood disorders.
  • Bristol-Myers Squibb - The U.S. Food and Drug Administration (FDA) has approved the group's lung cancer drug, acquired in last year's $4.1 billion takeover of Turning Point Therapeutics.
  • Walt Disney - Activist investor ValueAct Capital has taken a major stake in the company and believes the group's share price could double, people familiar with the matter said on Wednesday.
  • Tesla - Chinese President Xi Jinping told CEO Elon Musk that he supported Tesla's development in China, according to a statement on the automaker's Weibo account on Thursday.
  • Palo Alto Networks - The cybersecurity company is down 8.5% in after-hours trading after announcing that it expects second-quarter sales of $2.335 billion to $2.385 billion, compared with consensus estimates of $2.42 billion.
  • Eli Lilly - The pharmaceutical company plans to invest around $1 billion in a new plant in western Germany, people familiar with the matter told Reuters.
  • Maxeon Solar Technologies - The group's US-listed shares fell 7.5% after the close, as the solar panel group posted a third-quarter loss of $2.21 per share, compared with a loss of $1.09 a year earlier.

Analyst recommendations:

  • Abbvie Inc: Baptista Research upgrades to outperform from hold with a price target raised from USD 162.40 to USD 164.30.
  • Astrazeneca Plc: Landesbank Baden-Wuerttemberg maintains its buy recommendation and reduces the target price from 13000 to GBX 12000.
  • Bce Inc: Barclays maintains its equalweight recommendation and reduces the target price from 60 to CAD 55.
  • Burberry Group Plc: Morgan Stanley maintains its market weight recommendation and reduces the target price from 2200 to GBX 2100.
  • Charter Communications, Inc: Baptista Research maintains its hold recommendation with a price target reduced from USD 469 to USD 445.50.
  • Chevron Corporation: Baptista Research upgrades to buy from hold with a price target raised from USD 178.20 to USD 188.60.
  • Cisco Systems, Inc: Barclays maintains its equalweight recommendation and reduces the target price from USD 53 to USD 46.
  • Costar Group, Inc: Baird maintains its outperform rating and raises the target price from USD 87 to USD 94.
  • Diamondback Energy, Inc: Piper Sandler & Co maintains its overweight recommendation and raises the target price from USD 189 to USD 206.
  • Exxon Mobil Corporation: Baptista Research upgrades to outperform from hold with a price target raised from USD 120 to USD 122.80.
  • Fiserv, Inc: Cowen maintains its outperform rating and raises the target price from USD 137 to USD 147.
  • Halma Plc: Shore Capital maintains its buy recommendation and raises the target price from GBX 1960 to GBX 2150.
  • Hilton Worldwide Holdings Inc: Bernstein maintains its market perform recommendation and raises the target price from USD 161 to USD 171.
  • Informa Plc: AlphaValue/Baader Europe maintains its buy recommendation with a price target reduced from GBX 1102 to GBX 1093.
  • Intercontinental Hotels Group Plc: Bernstein maintains its market perform recommendation and raises the target price from 5600 to GBX 5766.
  • Lyondellbasell Industries N.V: Baptista Research maintains its hold recommendation with a price target reduced from USD 109 to USD 99.
  • Marks & Spencer Group Plc: Goldman Sachs upgrades to buy from neutral with a price target raised from GBX 255 to GBX 330.
  • Melrose Industries Plc: Investec maintains its buy recommendation and raises the target price from GBX 625 to GBX 650.
  • Metro Inc: BMO Capital Markets maintains its market perform recommendation with a price target reduced from 77 to CAD 73.
  • Micron Technology, Inc: BNP Paribas Exane maintains its outperform rating and raises the target price from USD 75 to USD 85.
  • Palantir Technologies Inc: William O'Neil & Co Incorporated upgrades to buy from dropped coverage.
  • Palo Alto Networks, Inc: Wells Fargo maintains its overweight rating and raises the target price from USD 270 to USD 280.
  • Resmed, Inc: Baptista Research downgrades to outperform from buy with a price target reduced from USD 232.40 to USD 174.
  • Roblox Corporation: JP Morgan maintains its neutral recommendation with a price target raised from USD 33 to USD 37.
  • Royal Caribbean Group: Baptista Research downgrades to underperform from hold with a price target reduced from USD 118 to USD 79.20.
  • Smiths Group Plc: Goldman Sachs maintains its buy recommendation and raises the target price from 2180 to GBX 2220.
  • Spirax-Sarco Engineering Plc: Morgan Stanley maintains its market weight recommendation and reduces the target price from 10700 to GBX 10250.
  • Sse Plc: BNP Paribas Exane upgrades to outperform from neutral with a price target raised from GBX 2000 to GBX 2215.
  • Target Corporation: Goldman Sachs maintains its buy recommendation and raises the target price from USD 168 to USD 176.
  • The Tjx Companies: Citigroup maintains its buy recommendation with a price target raised from USD 103 to USD 110.
  • Tractor Supply Company: Baptista Research upgrades to buy from hold with a price target reduced from USD 252.10 to USD 247.50.
  • Uber Technologies, Inc: Canaccord Genuity maintains its buy recommendation and raises the target price from USD 60 to USD 65.
  • Verisign. Inc: Baptista Research upgrades to outperform from hold with a price target raised from USD 235 to USD 240.60.
  • West Pharmaceutical Services, Inc: Baptista Research downgrades to underperform from hold with a price target reduced from USD 424 to USD 326.70.
  • Western Digital: BNP Paribas Exane maintains its outperform recommendation and raises the target price from USD 58 to USD 68.
  • Whitbread Plc: Bernstein maintains its market perform recommendation with a target price reduced from 3250 to GBX 3214.
  • Workday Inc: JMP Securities maintains its market outperform recommendation and raises the target price from USD 260 to USD 270.
  • Zscaler, Inc: Barclays maintains its overweight recommendation and raises the target price from USD 190 to USD 210.