The downturn in the indexes this week marks what might be called a consolidation, a contraction after a phase of gains. But financial analysts are still trying to work out whether the damage goes deeper, and whether the rest of the summer will be good or not. The month of August doesn't have a particularly bad reputation on the stock market, even if it falls within the low range of historical performances for the S&P500. September, on the other hand, is clearly and statistically the worst month of the year for investors, the only one with more declines than rises over the last 94 years. Precisely 52 declines for 42 rises, while the second worst month, February, has 46 declines for 50 rises. For the sake of completeness, December is statistically the safest month: 26 declines for 69 rises on the S&P500 since 1928 (all figures sourced from Yardeni Research).

Yesterday, Wall Street finally lost little ground at the close, but failed to hold on to the few gains it had made by mid-day. Europe had slipped a little further, particularly France and Germany, down 0.7% to 0.8%. This makes three sessions in a row in the red.

This week, the most significant development is the increase in US bond yields, driven by the return of the debt debate, among other factors. The 10-year maturity rate reached 4.17%, nearing the levels seen last October. The rise in bond yields is influenced by two main factors. First, positive labor market indicators in July have eased recession fears but also raised the possibility of the Fed raising rates more aggressively, beyond what investors expected. The market is now questioning whether there will be another rate hike in September or more afterward, which could delay the return to a pro-business monetary policy. The official US employment figures released at 8:30 this morning carry substantial importance for the Fed and the market, especially given the current economic landscape.

Today, we need to consider the results released by Apple and Amazon last night. Apple's publication fell short of expectations due to sluggish iPhone sales, causing a 2% drop in their share price during after-hours trading. However, investors were not entirely disappointed as the services division showed strong growth potential with high margins. On the other hand, Amazon's results were impressive, leading to a remarkable 9% surge in their share price, even with its massive market capitalization of $1,323 billion. This surge positively impacted the US leading indicators, while the rest of the stock market remained subdued. Amazon's success is attributed to improved merchant logistics efficiency and a return to double-digit growth in their servers division, which is a significant revenue source for the company. While other companies' results are still pending, Amazon, founded by Jeff Bezos, stands out as the star performer today.

In the Asia-Pacific region, we continue to hear rumours of various forms of support for business in China. It's almost becoming a running gag, as we're still closer to incantation than to concrete action. Japan is struggling to recover after two complicated sessions, with the Nikkei 225 ending the session down 0.1%. Flat electroencephalograms in Australia (-0.04%) and South Korea (+0.1%), but a little better in India (+0.4%). China is still going in all directions, with rises of 0.7% for the CSI300 and 1% for the Hang Seng, which had suffered since Tuesday. 

Today's economic highlights:

The monthly US employment figures were presented at 8:30 am. Full agenda here.
 
The dollar falls to around 0.9106 EUR and 0.7856 GBP. The ounce of gold is stable at 1940 USD. Oil rallied, with Brent North Sea crude at USD 85.44 a barrel and WTI US light crude at USD 81.81. The yield on 10-year US debt reached 4.16%. Bitcoin is trading at 29,130 USD.

In corporate news:
  • Amazon on Thursday reported sales growth ahead of Wall Street expectations, driven in particular by a reduction in delivery times and costs, while recent difficulties in the cloud computing business began to ease. In the wake of Amazon, Microsoft, Alphabet and Snowflake rose from 1% to 6.2% before the opening.
  • Apple - The iPhone maker said on Thursday that it expected sales to continue to fall in the current quarter, the fourth in a row, sending the US group's shares down by around 2% in pre-market trading, despite having beaten expectations on both sales and profit in the third quarter.
  • Airbnb said on Thursday it expected sales of $3.3 to $3.4 billion for its third quarter, ahead of analysts' estimates of $3.22 billion, amid industry fears over slowing US domestic demand.
  • Cloudflare is up 9.4% after announcing an increase in its revenue forecast for the fiscal year and a higher-than-expected quarterly profit.
  • Fortinet is down around 17.5% after lowering its guidance for fiscal 2023. It is dragging the cybersecurity sector down with it: Palo Alto Networks, Crowdstrike, Zscaler are down from 1.7% to 6.1%.
  • Digitalocean fell by 22.84% before the opening, the company having announced that it was unable to publish its quarterly report due to an accounting error. The company also lowered its forecasts for 2023.
  • Air Lease said on Thursday that it expected potential Airbus delivery delays, due to Pratt & Whitney engine problems, to offer more demand opportunities. Air Lease also posted better-than-expected results on Thursday for the quarter ending June, buoyed by higher lease rates.
  • Amgen - The biotech company, which is facing delays from the Federal Trade Commission (FTC) in its proposed acquisition of Horizon Therapeutics, reported higher quarterly earnings on Thursday, thanks to strong sales of treatments for cholesterol, osteoporosis and other drugs.
  • JP.Morgan plans to set aside around $3 billion to replenish the Federal Deposit Insurance Corporation (FDIC) fund, which lost $16 billion this year after the collapse of three US banks, once proposed rules are finalized by the banking regulator, the bank said in a filing Thursday.
  • Blackstone will submit an offer next week to acquire a 33.47% stake in Indian drugmaker Cipla, the Economic Times reported on Friday, citing sources with knowledge of the matter. The deal will also trigger a takeover bid for a further 26% of Cipla, according to the Indian business daily.
  • Fisker - The Californian electric vehicle manufacturer unveiled a new pickup truck on Thursday, a few weeks after starting deliveries of its flagship electric SUV and as it tackles persistent supply chain problems.
  • Walgreens - The US drugstore chain has sold shares in AmerisourceBergen for around $1.85 billion, reducing its stake in the drug distributor to around 16%, the group said on Thursday.
  • Tupperware Brands jumped 53.1% before the open on Friday, after the kitchenware manufacturer finalized a debt restructuring agreement, rekindling retail investor interest in the company.
  • Atlassian was up 23.2% before the opening after announcing a rise in fourth-quarter sales on Thursday.
  • Draftkings climbs 13.7% after raising its sales forecast for fiscal 2023.
  • Moderna - TD Cowen lowers its recommendation from "outperform" to "in-line performance". 

Analyst recommendations:

  • Amazon: Wedbush raised the recommendation to $170 from $146. Maintains outperform rating.
  • Apple: Rosenblatt Securities cut the recommendation to neutral from buy. PT set to $198
  • Booking Holdings: Deutsche Bank raised the price target to $3,500 from $3,150.
  • Lamar Advertising: Morgan Stanley cut the target to $100 from $108. Maintains equal-weight rating.
  • Modine Manufacturing: B Riley Securities raised the target to $55 from $45. Maintains buy rating.
  • Parker-Hannifin: Argus Research Corp raised the target to $460 from $390. Maintains buy rating.
  • Quanta Services: B Riley Securities raised the target to $230 from $190. Maintains buy rating.
  • Vulcan Materials: Thompson, Davis & Co maintains buy rating. PT up to $250 from $215.
  • Walker & Dunlop: Wedbush maintains outperform rating. Price target upgrades to $105 from $90.