Today on Wall Street: Hope for the best, prepare for the worse

06/24/2021 | 10:10am

Nasdaq 100 futures just reached a fresh record high thanks to the rise of tech stocks. Today, fresh data on employment showed a slight improvement last week.

Jobless claims fell in the week to June 19 to 411,000 from a revised 418,000 in the previous week, the Labor Department reported Thursday. This is smaller than what economists surveyed by Reuters expected (380,000). 

On markets, Tesla jumped 2.7% after Elon Musk tweeted that he would only publicly list the Starlink satellite broadband service when its cash flow is more predictable, as he believes going sooner would be painful. Starlink, currently operated by space exploration company SpaceX, allows people to connect to the Internet via satellite.  

Alphabet Inc, Nvidia Corp, Microsoft Corp, Netflix Inc and Facebook Inc also performed well recently. 

The overall context remains that economic growth is strong and allows companies to leave the coronavirus episode behind. What markets hate the most are unexpected or too sudden events.  

They are the ones that create imbalances and trigger chain reactions by reintroducing less rational behavior on markets. When changes occur at a predictable pace, investors have time to adapt. When the US central bank blows the whistle on the end of the ultra-accommodative phase and points the way to a more sober policy, it creates a stir, but no one is taken by surprise. Especially when the marker is set two years in advance.  

On the Covid front, data published by Our World in Data shows that 22.2% of the world's population has received at least one dose of vaccine, a rate that reaches only 0.9% of people in poor countries. Canada, Israel and the United Kingdom claim around 65% of those vaccinated with one dose. The United States, Italy and Germany are at just over 50% and France at just under 50%. In the EU, the average one-dose vaccination rate is 48%. It is 41% in North America and 22% in Asia. Many Western countries are now faced with a slowdown in vaccination. Given these figures, it is not inconceivable that the pandemic will thrive again. In any case, it is a risk factor that investors should keep in mind.    

 

Economic highlights of the day: 

The Ifo business climate index in Germany and the Bank of England's rate decision in Europe, and the latest estimate of U.S. GDP for Q1, May durable goods orders and weekly unemployment figures in the United States.  

The dollar/euro pair remains anchored around USD 0.8371. Gold is stagnant at USD 1781 per ounce. Not much more movement in oil this morning, with Brent crude at USD 74.94 per barrel and WTI trading at USD 72.77. The yield on 10-year US debt is steady at 1.49%. Bitcoin is hovering around USD 33,900. 

 

On markets: 

* Accenture on Thursday reported better-than-expected third-quarter revenue and raised its annual revenue forecast as more companies turn to its IT services to accommodate a combined onsite and remote work model. It gained 4% in pre-market trading. 

* Eli Lilly announced Thursday that it will file a marketing application later this year for its experimental Alzheimer's drug, donanemab, with the U.S. Food and Drug Administration (FDA), which has granted it breakthrough therapy status. The pharmaceutical group climbed 8.2% in pre-market trading. 

* Visa announced on Thursday an agreement to buy the European open banking system platform Tink for 1.8 billion euros in cash. 

EBay will sell 80% of its South Korean subsidiary to the retailer E-Mart, owned by Shinsegae Group, for 3.4 trillion won (2.5 billion euros), the two groups announced Thursday. 

* Blackstone on Thursday raised its bid for St. Modwen Properties to 1.25 billion pounds (1.46 billion euros), a proposal the British property developer said it had accepted. 

* Brunswick, a boat manufacturer, announced the acquisition of Norwegian marine electronics group Navico for $1.05 billion (€880 million). 

* Rite Aid lost 6% in pre-market trading after reporting quarterly sales below the IBES consensus by Refinitiv. 

* Oracle has been selected by Deutsche Bank to simplify the bank's IT systems and help it cut expenses, a member of the German No. 1 bank's board of directors announced Thursday. 

 

Analyst recommendations:  

  • Beazley: Berenberg downgraded from buy to hold with a GBp 410 target. 
  • BP Plc : HSBC downgraded from buy to hold with a GBp 360 target. 
  • BWX Technologies : Credit Suisse downgrades stock to neutral from outperform, adjusts price target to $67 from $74 
  • Cineworld: Berenberg remains in the hold category with a price target raised from 70 to 85 GBp. 
  • County Bancorp, Inc : Hovde downgrades stock to market perform rating from outperform, adjusts price target to $34.50 from $28 
  • First Horizon : Hovde Group upgrades first horizon national to outperform from market perform, adjusts price target to $20 from $19 
  • GlaxoSmithKline: Deutsche Bank upgrades from Sell to Hold with a target of GBP 1,350.  
  • Goldman Sachs : Exane BNP Paribas adjusts pt to $369 from $340, maintains neutral rating 
  • Micron Technology, Inc : Goldman Sachs adjusts pt to $108 from $122, maintains buy rating 
  • Morgan Stanley : Exane BNP Paribas adjusts pt to $94 from $85, maintains outperform rating 
  • Nutanix : JPMorgan adjusts price target to $50 from $38, keeps overweight rating 
  • Plug Power : JPMorgan adjusts pt to $51 from $47, maintains overweight rating 
  • The Sherwin-Williams Company : JPMorgan adjusts pt to $310 from $285, maintains overweight rating 
  • UGI : BofA Securities upgrades stock to buy from neutral, price target is $51 
Romain Fournier
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