According to estimates released today by the Bureau of Economic Analysis, the PCE price index increased 0.3 percent. Excluding food and energy, the core PCE price index also gained 0.3 percent, which is not as bad as feared, although this does confirm that inflation is being stubbornly resilient. On an annual basis, the Core PCE index rose by 2.8%, while 2.7% was expected in the Bloomberg consensus. Futures rose after the announcement, and then retreated a bit, highlighting the confusion among investors.

Back to yesterday’s session. It was rather worrying, with a sharp fall in almost every market. However, the optimists among us will say that US indices opened at their lows and closed at their highs for the day, although still in the red. In figures, for example, the Nasdaq 100 lost 2% at the start of the session to close down 0.55%, despite Meta Platforms' 10.6% plunge.

To sum up the situation, the markets were coming off two or three sessions of rebound when Meta Platforms made things difficult for the tech sector on Wednesday with higher-than-expected investment forecasts. All the while doubling its profits, it should be noted. The market fears that the company will embark on a costly, poorly managed program, as was the case with the Metaverse. Thursday's session was therefore shaping up rather badly, and the situation worsened when the US statistical office announced that 1st quarter GDP had risen by just 1.6% on an annualized basis, with an inflationary component too vigorous for the Fed to cut rates in the short term. Hence the very, very negative opening on Wall Street. But during the session, some sectors, including semiconductors, sounded the revolt. Not enough to turn the tide, but substantial nonetheless, as losses were significantly reduced.

The truth is that the US indices were unlikely to stall completely yesterday, for the simple reason that Microsoft and Alphabet were publishing after the bell. If the figures for two of the Magnificent Seven turned out to be good, bearish bets would have had every chance of being invalidated. So, caution advised investors not to go too short. Of course, if Microsoft and Alphabet's results turned out to be very disappointing, we'd be looking at -3% for Friday's session.

Secondly, yesterday's upward movement in AI-related semiconductor stocks is no joke. Indeed, if Meta is clearly increasing its investments in the specialty, we're going to have to buy stuff. AI chips in particular. So the industry's suppliers are going to benefit. And so we got +4% for Nvidia and Super Micro Computer.

Microsoft and Alphabet are having a ball. Both companies published their results after the close. The largest capitalization in the world gained 4.3% following its earnings report. Microsoft is rolling out its AI plan without a hitch, after stealing the show from its younger companions. But it was Alphabet in particular that impressed, at least enough for the stock to gain 11.4% (!) after trading. The group reported higher-than-expected earnings and, like Meta, mentioned an acceleration in capital expenditure. At the same time, however, it announced a first-ever dividend payout (the yield is derisory, but it's the intention that counts) and the accompanying large-scale share buyback. Microsoft and Alphabet have thus bucked the trend and put a smile back on investors' faces.

On the macro front, in addition to the US PCE, the Bank of Japan was in the spotlight this morning. No surprises, it kept its interest rates and confirmed that inflation is anchored at around 2% in the medium term.

In the Asia-Pacific region, the week ended on a positive note thanks to US technology. The Nikkei 225 gained 0.8%, while Hong Kong soared by over 2%. Korea and Taiwan posted gains of over 1%. India and Australia are in the red, with the ASX down 1.3%, weighed down by the 4.4% fall of heavyweight BHP Group after its offer was rejected by Anglo American. BHP weighs over 10% of the Australian index, of which it is the main weighting. European leading indicators and futures on Wall Street are in the green.

Economic highlights of the day:

US PCE inflation, personal income and household consumption, as well as the University of Michigan are on the agenda. 

The dollar is worth EUR 0.9331 and GBP 0.7993. The ounce of gold is trading at USD 2342. Oil remains firm, with North Sea Brent at USD 88.53 a barrel and US light crude WTI at USD 84.36. The yield on 10-year US debt rises to 4.69%. Bitcoin is trading at USD 64,400.

In corporate news:

  • Alphabet, Google's parent company, announced on Thursday the first dividend in its history and a $70 billion share buyback program, while reassuring on its advertising revenues. The stock gained 12% before the opening.
  • Microsoft reported quarterly results ahead of Wall Street expectations on Thursday, thanks to the success of its new artificial intelligence (AI) features in its cloud services and enterprise software. The stock gained 4.3% before the opening.
  • Tesla, Nvidia, Meta Platforms Amazon.com gain between 1% and 3.1% before the opening, in the wake of Alphabet and Microsoft.
  • Intel said on Thursday it expected second-quarter sales and earnings to fall short of expectations due to weak demand for its chips for traditional data centers and personal computers. The stock lost 7.9% before the opening.
  • Snap - The group's quarterly sales and user growth beat Wall Street expectations on Thursday, thanks to improvements in Snap's advertising system. The stock gained 24% before the opening.
  • T-Mobile US on Thursday raised its forecast for annual growth in the number of subscribers to its plans, with more customers taking advantage of its discounted offers and 5G network expansion.
  • Gilead Sciences reported a first-quarter loss on Thursday, linked to a $3.9 billion charge for its recent acquisition of liver drug developer CymaBay Therapeutics, this while sales rose 5% year-on-year.
  • Chemours said Thursday that its CFO, Jonathan Lock, had resigned on April 23.
  • Capital One Financial - First-quarter profit rose 35% as customers paid more on the company's credit cards amid rising interest rates.
  • Cigna plans to make biosimilars of AbbVie's flagship arthritis drug Humira available to eligible patients free of charge, the health insurer said Thursday.
  • Fair Isaac posted a rise in second-quarter earnings on Thursday, helped by strong demand for its credit rating solutions and software.
  • KLA on Thursday forecast fourth-quarter sales ahead of analysts' expectations, anticipating strong demand for its chipmaking tools supported by demand for AI applications.
  • Juniper Networks missed Wall Street estimates for first-quarter sales on Thursday, as demand was sluggish in an uncertain economic environment.
  • Arthur J. Gallagher - The insurance broker posted a jump in first-quarter earnings on Thursday, thanks to higher commissions and fees. The stock gained 2.7% after the close.
  • Western Digital - Quarterly revenues and earnings beat expectations on Thursday, thanks to stronger demand for data storage.
  • Hartford Financial Services reported a rise in first-quarter earnings on Thursday, as the insurer benefited from higher investment income.
  • Atlassian - The software maker forecast fourth-quarter sales ahead of Wall Street estimates on Thursday, citing increased demand for its cloud computing services.
  • Verisign - The Internet services company reported a 5.5% rise in first-quarter sales on Thursday, helped by steady demand for domain name registration.
  • Edwards Lifesciences reported higher quarterly earnings on Thursday, driven by strong demand for its artificial heart valves and other medical devices.
  • Principal Financial reported a rise in first-quarter earnings on Thursday, thanks to higher premiums and investment income.

Analyst recommendations:

  • Caterpillar Inc.: Stifel downgrades to hold from buy and raises the target price from USD 293 to USD 350.
  • Citizens Financial Group, Inc.: Piper Sandler & Co upgrades to overweight from neutral with a price target raised from USD 35 to USD 41.
  • Dow Inc.: JP Morgan upgrades to overweight from neutral with a price target raised from USD 55 to USD 61.
  • Epam Systems, Inc.: Morgan Stanley downgrades to equalwt from underwt with a price target reduced from USD 236 to USD 225.
  • First Citizens Bancshares, Inc.: Piper Sandler & Co downgrades to neutral from overweight with a price target raised from USD 1850 to USD 1950.
  • Spotify Technology S.a.: Phillip Securities upgrades to buy from accumulate with a price target raised from USD 270 to USD 340.
  • Alphabet Inc.: JMP Securities maintains its market outperform recommendation and raises the target price from USD 160 to USD 200.
  • Freeport-Mcmoran Inc.: Argus Research Company maintains its buy recommendation and raises the target price from USD 44 to USD 54.
  • Intel Corporation: Truist Securities maintains its hold recommendation with a price target reduced from USD 45 to USD 33.
  • Snap Inc.: RBC Capital maintains its sector perform recommendation and raises the target price from USD 13 to USD 16.
  • Tractor Supply Company: Morgan Stanley maintains its underperform rating and raises the target price from USD 195 to USD 235.
  • Vertiv Holdings Co: Mizuho Securities maintains a neutral recommendation with a price target raised from USD 56 to USD 95.
  • Western Digital Corporation: Loop Capital Markets maintains its buy recommendation and raises the target price from USD 73 to USD 90.
  • Abrdn Plc: HSBC upgrades to hold from reduce with a price target raised from GBP 1.45 to GBP 1.50.
  • Antofagasta Plc: Canaccord Genuity downgrades to hold from buy with a price target raised from GBX 1925 to GBX 2065.
  • Ashtead Group Plc: HSBC upgrades to buy from hold with a price target raised from GBP 51.10 to GBP 66.
  • Convatec Group Plc: Peel Hunt downgrades to reduce from add with a price target reduced from GBX 245 to GBX 225.
  • Unilever Plc: AlphaValue/Baader Europe downgrades to reduce from add with a price target raised from GBX 4241 to GBX 4324.
  • Anglo American Plc: BMO Capital Markets maintains its market perform recommendation and raises the target price from GBP 20 to GBP 25.