Western stock markets stalled yesterday, as investors clearly need to digest after swallowing tons of technology stocks. The Nasdaq 100 closed down 1.8%, its second worst session of the year after January 31. Apple and Microsoft lost nearly 3%, Tesla and Broadcom around 4%, while Amazon, Meta and Alphabet also fell, but to a lesser extent. However, the market kept its appetite for its favorite dish, Nvidia, which managed to gain 0.9% amid the slump. The group now weighs nearly 6% of America's favorite ETF, Invesco's QQQ, which replicates the Nasdaq 100, and is third on the podium behind Microsoft (8.8%) and Apple (7.7%), ahead of Amazon (5.2%).

Speaking of ranking big things, do you know which US state was home to the most corporate headquarters 30 years ago? It was New York, with 19% of the headquarters of the 100 largest companies by capitalization in 1994. I got this info from Bank of America's latest weekly Global Markets Survey. The Big Apple was followed by Texas (15%, oil specialties), California (9%, technology), New Jersey (8%, proximity to NYC) and Illinois (7%, thanks to automotive companies). Thirty years later, California is at 40%, Washington (the state, not the capital, thanks to Microsoft and Amazon) is at 15%, New York at 10%, Texas at 7% and Nebraska at 3% (thanks to Berkshire Hathaway). Geographic power in the USA has thus shifted dramatically over the past 30 years, from East to West, with California and Washington State accounting for 55% of the headquarters of the largest US corporations.

Let's end our geographical digression and return to equity markets. The Financial Services Committee of the US House of Representatives hears from Jerome Powell from 10am ET, as part its regular report to Congress. This is important, because the financial community will be looking to see if and when interest rates can come down. Even if the stock market is soaring right now - well, okay, except yesterday - investors would be more comfortable if the cost of money fell. First of all, because there would be more of it, which rarely bothers them, and also because it would help remove some of the swords of Damocles (such as real estate falling apart, corporate bankruptcies linked to overindebtedness, etc). Today's hearing is in two parts. First, Powell will read from a document made available on the Fed's website at the start of his speech. The market therefore has immediate access to it. Then, the members of the committee will ask their questions, which generally gives rise to less formal, and therefore potentially more interesting comments. Experts believe that the head of the Federal Reserve won't vary his speech too much. In essence, he should say that things aren't so bad, the economy is holding up, inflation seems to be slowing down, so rate cuts are not imminent and he’s sticking to the plan. The market doesn't seem overly stressed by this intervention. The proof? US bond yields fell yesterday. Still, it would be interesting to know Powell's reaction to the slight deterioration in US economic indicators since last week. Factory orders and the ISM services index came in below estimates in January and February, respectively.

Today, it was the ADP report that disappointed investors. U.S. private payrolls rose slightly less than expected in February, while wages rose at the slowest pace in more than two years. Private payrolls increased by 140,000 jobs last month, instead of 150,000 expected in the Reuters consensus. It seems that the US economy is cooling…. In any case, all three Wall Street indexes opened in the green this morning. Are rate cuts closer than we think?

In other news, the Biden/Trump duel that some Americans would like to avoid is likely to recur. The former Republican president left crumbs (Vermont, the smallest state at stake) to his rival for the nomination Nikki Haley on Super Tuesday, a day rich in primaries. She just announced her withdrawal from the race. Meanwhile, Bitcoin broke its record, while gold continued to flirt with its peaks.

Economic highlights:

The ADP employment report, JOLTS job offers, wholesale inventories and DOE crude inventories are on the agenda, along with Jerome Powell’s speech.

The dollar is down to EUR 0.9186 and GBP 0.7859. Gold is up to USD 2,139. Oil is little changed, with North Sea Brent at USD 82.87 a barrel and US light crude WTI at USD 79.09. The yield on 10-year US debt falls to 4.15%. Bitcoin trades at USD 67,000.

In corporate news:

  • Nordstrom plunged 9.7% in premarket trading after the group reported annual earnings and sales below Wall Street forecasts. The department store chain, which cited a slower-than-expected rebound in demand, is also forecasting sales for this year well below analysts' expectations.
  • JD.com jumped 10.9% in pre-market trading, as the Chinese e-commerce giant reported better-than-expected fourth-quarter sales. The group is also planning a share buyback of up to three billion dollars.
  • Ross Stores fell by 3.8% in pre-market trading after reporting lower-than-expected sales and earnings amid a decline in so-called non-essential spending.
  • The Carlyle Group - The American private equity group has begun the process of selling Tokiwa, in which it acquired a stake in 2019, in a deal that values the Japanese cosmetics supplier at $800 million, three sources close to the matter reported.
  • Xerox is down 8.1% in after-hours trading, as the group seeks to raise funds to reduce its short-term debt repayment schedule via a $300 million private placement of convertible bonds due 2030.
  • Crowdstrike Holdings reported better-than-expected full-year results on Tuesday evening, boosted by an increase in corporate spending on cybersecurity, sending the stock up 24.7% in pre-market trading.
  • Nio - The Chinese electric vehicle manufacturer gained 4.9% in premarket trading after reporting a smaller-than-expected fourth-quarter net loss of 5.37 billion yuan.
  • Box climbed 2.8% on the premarket after the online content management platform reported adjusted fourth-quarter earnings ahead of analysts' expectations.

Analyst recommendations:

  • Crowdstrike Holdings, Inc.: Morningstar upgrades to hold from sell with a price target raised from USD 220 to USD 300.
  • Honeywell International Inc.: Berenberg upgrades to buy from hold with a price target raised from USD 195 to USD 240.
  • Progressive Corporation: Morgan Stanley upgrades to overwt from equalwt with a price target raised from USD 185 to USD 227.
  • Rockwell Automation, Inc.: Berenberg downgrades to hold from buy with a price target reduced from USD 330 to USD 290.
  • Target Corporation: HSBC upgrades to buy from hold with a price target raised from USD 140 to USD 195.
  • United Parcel Service Inc.: Zacks upgrades to neutral from underperform with a price target raised from USD 121 to USD 171.
  • Antofagasta Plc: RBC Capital downgrades to sector perform from outperform with a target price reduced from GBX 1800 to GBX 1650. Barclays downgrades to underweight from equalweight with a price target reduced from GBP 13.75 to GBP 12.95.
  • Rotork Plc: Stifel downgrades to hold from buy and raises the target price from GBX 340 to GBX 350.
  • Direct Line Insurance Group Plc: Peel Hunt maintains its add recommendation and raises the target price from GBX 150 to GBX 230.
  • Oxford Nanopore Technologies Plc: Numis maintains its buy recommendation and reduces the target price from GBX 400 to GBX 230. JP Morgan maintains its overweight recommendation and reduces the target price from 3.25 to GBP 2.10.
  • Premier Foods Plc: Peel Hunt maintains its buy recommendation and raises the target price from GBX 163 to GBX 200.