The U.S. Bureau of Labor Statistics published an updated December Consumer Price Index data this morning, with a new calculation using new seasonal adjustment factors. It was revised to +0.2% from +0.3%, which means prices grew at a slower pace than previously thought. Futures on Wall Street’s main indexes soared after the release, with +0.3% for the S&P 500, +0.2% for the Dow Jones and +0.3% for the Nasdaq 100. New inflation data for January comes next week.

The S&P500 failed to close above 5,000 points yesterday. It ended just 0.06% higher at 4998 points. Traders obviously tried a last-minute move, but it failed. Literally last-minute, since the index was trading at 5000.40 points at 4pm ET, and retreated when the bell rang.

Tech continues to perform well, but it was the results of Ralph Lauren (+17%) and Walt Disney (+11%) that moved indices, as well as those of PayPal (-11%) in another direction.

Rate cuts are still on investors’ minds. I just read an interesting article published yesterday by the Wall Street Journal. It reminds us that investors are pretty rubbish at predicting what the Fed is planning to do. For example, during the 2008 financial crisis, they were pretty much consistently upside down. And then again between 2009 and 2016, when they expected rates to exceed 2% most of the time, whereas the level never went above 0.25%. Not much better at the end of the 2017 rate hike cycle, when they miscalibrated the scale of rate increases. Same thing in 2022. Oh, and in 2020, they misjudged the size of the rate cuts. The moral of the story is that when the market is forecasting six rate cuts this year, there may be reason to be cautious.

AI is still the buzz word that makes of breaks tech companies. After Nvidia, the barometer of the sector with a MOAT that guarantees it several quarters of impunity, we had Super Micro Computer, the low-end technology that has become indispensable to the big names in Silicon Valley. Now, perhaps the time has come for ARM Holdings. The British chip designer, which went public on Wall Street last year without making too much of a splash, has just been awarded its little "AI" label, after surprisingly robust results propelled by artificial intelligence. The result: +48% in yesterday's session alone. FOMO is strong, and everyone's jumping on the bandwagon. This is justified up to a point, of course, but we're clearly in a bubble phase in the making.

In Europe, stock markets moved in different directions. Amsterdam took advantage of Adyen's surge to gain 1.6%. In Paris, luxury conglomerate Kering's mediocre but promising figures benefited its peer LVMH. In Switzerland, on the other hand, the SMI fell on the back of the health sector's woes, particularly those of Novartis. Healthcare also weighed on London with AstraZeneca's fall of over 6% following mediocre results.

China is back on a downward trend. The Hang Seng lost 0.8%, weighed down by renewed fears about the property sector. Shanghai did not open today and will remain closed all next week, again for the New Year festivities.

Economic highlights of the day:

German inflation for January and the revised December CPI data are today’s main indicators. The full agenda is here. 

The dollar is worth EUR 0.9284 and GBP 0.7934. The ounce of gold is firm at USD 2026. Oil rebounded, with North Sea Brent at USD 81.40 a barrel and US light crude WTI at USD 76.08. The yield on 10-year US debt climbed back to 4.15%. Bitcoin trades at USD 47,600.

In corporate news:

  • PepsiCo missed Wall Street estimates for fourth-quarter sales, as multiple price hikes reduced demand for its Lay's fruit juices and potato chips. The stock lost 1% before the opening.
  • Capri Holdings lost 1.8% in after-hours trading, as the parent company of Michael Kors reported below-consensus quarterly sales and earnings amid weak demand for its luxury brands.
  • Take-Two Interactive Software fell by 9.7% in pre-market trading, as the video game publisher forecast bookings for its fourth fiscal quarter below market expectations. The company also lowered its annual guidance due to signs of weak demand for some of its flagship game titles, such as "NBA 2K".
  • Pinterest plunged 11.2% in pre-market trading, as the social network announced on Thursday evening that it expected sales for the current quarter to be between $690 and $705 million, well below the average $702.6 million estimated by analysts, according to LSEG data.
  • Western Digital is down 2% in after-hours trading, after postponing the publication of its quarterly accounts due to errors in the reporting and recording of Flash Ventures' holdings.
  • Motorola Solutions is down 4% in after-hours trading, as the Group's forecast for weak earnings this year takes precedence over the announcement of a $2 billion share buyback plan and good quarterly results.
  • Expedia plunges 12% in after-hours trading following the appointment of Ariane Gorin as CEO, replacing Peter Kern. The group also warned that its sales this year would be impacted by moderating demand in the travel sector. AIRBNB loses 3.5% in the wake of Expedia.
  • Illumina announced on Thursday evening that it expected annual sales to be virtually unchanged from fiscal 2023, against a backdrop of continuing weak demand for its genetic testing tools and diagnostic products. The share price fell by 2.7% in the aftermarket.
  • Duke Energy - Under pressure from the US Congress, the utilities group plans to withdraw energy storage batteries produced by Chinese manufacturer CATL from one of the largest US Marine Corps bases and phase out CATL products from its civilian projects, the company confirmed to Reuters.
  • Affirm Holdings fell 10.9% in pre-market trading after the financial technology group presented forecasts for fiscal 2024 that were deemed disappointing.
  • Verisign reported a 3% increase in fourth-quarter sales on Thursday evening, beating market forecasts thanks to strong demand for its Internet services, which include domain name registration.
  • Cloudflare shares soared by 26.2% in pre-market trading, with the Group anticipating sales for the current quarter at the mid-point above the consensus provided by LSEG.

Analyst recommendations:

  • Arista Networks: Deutsche Bank maintains its hold recommendation with a price target raised from USD 190 to USD 250.
  • AstraZeneca: Carnegie Group downgrades to hold from buy with a price target reduced from SEK 1530 to SEK 1400.
  • Bce: Morningstar maintains its buy recommendation and raises the target price from CAD 40 to CAD 60. Morningstar maintains its buy recommendation and reduces the target price from CAD 65 to CAD 40.
  • Bellway: Peel Hunt downgrades to hold from buy with a price target raised from GBX 2540 to GBX 2930.
  • Broadcom: DBS Bank maintains its buy recommendation and raises the target price from USD 1028.70 to USD 1384.10.
  • Brookfield Renewable Corporation: JP Morgan resumes coverage with a neutral rating and a target price of USD 31.
  • Cencora: Deutsche Bank maintains its buy recommendation and raises the target price from USD 211 to USD 262.
  • Cloudflare: Mizuho Securities maintains a neutral recommendation with a price target raised from USD 73 to USD 105. Stifel maintains its hold recommendation with a price target raised from USD 60 to USD 99.
  • Datadog: Wells Fargo maintains its equalweight recommendation and raises the target price from USD 100 to USD 130.
  • Dexcom: Cowen maintains its outperform rating and raises the target price from USD 110 to USD 160.
  • Expedia Group: Morningstar downgrades to hold from buy with a target price of USD 178. D.A. Davidson maintains a neutral recommendation with a price target raised from USD 125 to USD 152.
  • Hilton Worldwide Holdings: Raymond James maintains its outperform rating and raises the target price from USD 170 to USD 215.
  • Illumina: Stifel maintains its buy recommendation and raises the target price from USD 125 to USD 160. Citigroup remains neutral recommendation with a price target raised from USD 120 to USD 145. Nephron Research LLC maintains a sell recommendation with a price target raised from USD 80 to USD 100.
  • Keller Group: Berenberg upgrades to buy from dropped coverage with a price target raised from GBX 925 to GBX 1250.
  • Lululemon Athletica: BNP Paribas Exane downgrades to underperform from neutral with a price target reduced from USD 430 to USD 415.
  • Masco Corporation: BMO Capital Markets maintains its market perform recommendation with a price target raised from 60 to USD 75. Truist Securities maintains its buy recommendation and raises the target price from USD 65 to USD 81. Thompson Research Group maintains its not rated recommendation and raises the target price from USD 65 to USD 83.
  • Nvidia Corporation: DBS Bank maintains its buy recommendation and raises the target price from USD 608.40 to USD 784.60.
  • Paypal Holdings: DZ Bank AG Research downgrades to hold from buy with a price target reduced from USD 76 to USD 60. Morningstar maintains its buy recommendation and reduces the target price from USD 135 to USD 104.
  • Pinterest: Morgan Stanley maintains its market weight recommendation and raises the target price from USD 25 to USD 33. Barclays maintains its equalweight recommendation and raises the target price from USD 29 to USD 36.
  • S4 Capital: HSBC maintains its buy recommendation and reduces the target price from 1.20 to GBP 0.82.
  • Schlumberger: Morningstar upgrades to buy from hold with a target price raised from USD 56 to USD 60.
  • Spotify Technology: Phillip Securities maintains its accumulate recommendation and raises the target price from USD 190 to USD 270.
  • The Allstate Corporation: Wells Fargo maintains its underweight recommendation and raises the target price from USD 112 to USD 145.
  • Transdigm Group: Morningstar downgrades to sell from hold with a price target raised from USD 990 to USD 1000. Citigroup maintains its buy recommendation and raises the target price from USD 1114 to USD 1380.
  • Uber Technologies: DBS Bank maintains its buy recommendation and raises the target price from USD 70 to USD 85. CICC maintains its outperform recommendation and raises the target price from USD 53 to USD 78.80.
  • Walt Disney Company (The): Citigroup maintains its buy recommendation and raises the target price from USD 106 to USD 130.