Wall Street opened well below Friday's close. This comes after the US S&P500 index lost 4.8% over the week. Investors realized that what they though was the beginning of the decline in US inflation, was just a fluke. It became apparent that prices actually continued to rise. Not by much, but enough to impact sentiment and send stocks back down.

Indexes didn't fall back to their lows of the year, which were hit in June, but they did take a big hit. Over 2022, the Nasdaq 100 lost 27%.

And this week might bring as much turmoil as the previous one. The US central bank will decide on Wednesday on its next rate hike. The latest forecast gives an 80% chance of a 75 basis point rate hike and a 20% chance of a 100 basis point hike. But beyond the decision itself, it is still the next move that investors are trying to guess, and the distance that separates them from the final hike, i.e. the moment when the Fed will be sufficiently serene with regard to inflation to stop its aggressive policy. Other central banks are also on the agenda this week, notably on Thursday with the decisions of the Bank of Japan, the Swiss National Bank and the Bank of England.

In other news, geopolitical tensions are still high. Joe Biden reaffirmed that the US military would defend Taiwan in case of a Chinese invasion. Meanwhile, tensions are rising between Kyrgyzstan and Tajikistan, and between Armenia and Azerbaijan. In this atmosphere, the United Nations General Assembly will be held in New York from September 19 to 23.

 

Economic highlights of the day:

The NAHB house price index for September is today's main indicator. All the macro agenda is here. 

The euro and the dollar are close to parity again. The ounce of gold is trading around USD 1667. Oil is not far from Friday's level, with North Sea Brent at USD 89.55 per barrel and US WTI light crude at USD 83.18. The yield on 10-year US debt remains high at 3.45%. Bitcoin hovers near USD 19,000.

 

In corporate news:

* Tesla said on Monday it would continue to expand its sales channels in China at a normal pace, reacting to a Reuters report that the U.S. automaker is considering a rethink of its sales strategy in its second-largest market. The group also completed a project to expand production capacity at its Shanghai plant on Monday, according to a statement on a Chinese city government website.

* Take-Two Interactive Software fell 6 percent in premarket trading as Bloomberg reported Sunday that footage of the game "Grand Theft Auto VI" was leaked online by hackers.

* Apple, Qualcomm - Apple's new satellite-capable iPhone 14s feature both a Qualcomm chip and custom components from the apple company, according to iFixit, an electronics teardown specialist.

* Amazon has suspended construction of new warehouses in Spain until 2024, Spanish news site El Confidencial reported Monday, citing unidentified sources within the company.

* Bank of New-York Mellon, Warburg Group and Deutsche Bank will pay 60 million euros to the German tax authorities as part of the investigation into the alleged "cum-ex" tax fraud scandal, Deutsche Bank said Monday.

* Pfizer, BioNTech - Brazil has given the green light to the two labs' COVID-19 vaccine in children aged six months to four years, a government agency announced Friday.

* Bluebird - The U.S. Food and Drug Administration (FDA) has approved Bluebird's Skysona, a gene therapy drug for the treatment of a rare neurological disorder, the company announced Friday. The stock jumped 15.6% in pre-market trading.

* Digital World Acquisition - The investment firm (SPAC), which has signed a deal to merge with Donald Trump's Truth Social but is struggling to make that happen, has not paid Saratoga Proxy Consulting despite the firm's help in mobilizing shareholders, the Financial Times reported Saturday.

 

Analyst recommendations:

  • Adobe:  Wells Fargo Securities downgrades to equal-weight from overweight. PT up 3.5% to $310
  • D.R. Horton: KeyBanc Capital Markets upgrades to overweight from sector weight. PT up 18% to $84.
  • EQT Corp: BMO Capital Markets upgrades to outperform from market perform. PT rises 41% to $65.
  • Fidelity National: Keefe, Bruyette & Woods downgrades to market perform from outperform. PT up 16% to $98.
  • Huntsman: RBC Capital Markets cut its recommendation to sector perform from outperform. PT up 17% to $30.
  • Intuit: CICC initiated coverage with a recommendation of market perform. PT set to $416.
  • ITM Power: AlphaValue remains Buy with a reduced target of GBp 320 to GBp 207.
  • Meritage Homes: KeyBanc Capital Markets upgrades to overweight from sector weight. PT up 17% to $87.
  • NCR: Morgan Stanley downgrades to equal-weight from overweight. PT up 16% to $27.
  • PulteGroup: KeyBanc Capital Markets upgrades to overweight from sector weight. PT up 19% to $47.