The market is awaiting rate cuts and Nvidia's results with a certain degree of serenity, since the fear index, the VIX, is on its way back to its 2024 lows. Two of Wall Street's three indices, the Nasdaq 100 and the S&P500, surpassed their previous day's highs, while Europe took a little pause. The Dow Jones broke the 40,000-point barrier at the close.

This strong performance comes despite a difficult environment, with ultra-polarized elections, high-stakes military conflicts and ever-increasing trade tensions. The majority of investors are taking it in their stride, neither insensitive to the rhetoric of doomsayers nor impervious to the prophecies of a new economic golden age fueled by AI. In this respect, the results and forecasts of Nvidia, naturally crystallize considerable expectations, as if each of the company's quarterly releases were in itself a confirmation of the promises of artificial intelligence... and by ricochet of the ambient optimism. The fact that Nvidia historically publishes three weeks after the other big tech companies provides the perfect spotlight for the stock. Financiers are confident enough to have allowed the share to reach a new record close to USD 954 yesterday, representing a market capitalization of 2,346 billion dollars, the third highest in the world. Fortunately, Apple had the good sense to fight back, gaining 16% in the space of a month, otherwise Nvidia would have taken second place worldwide after almost doubling in value since January 1.

However, this increase is eclipsed by Vistra's 145% gain. It belongs to the “utilities” segment, the most depressing sector of the stock market: companies that provide basic public services such as energy and sanitation, whose growth is generally anemic. But by 2024, the specialty is back in the black. As pointed by the Wall Street Journal, Vistra and its peers produce electricity and now, several consultancies believe that AI will generate enormous additional energy requirements in the future. They've turned the whole thing on its head and come to the conclusion that the most likely ceiling for AI in the years to come is not so much computing power, but electricity generation. Their little capitalist brains only had to take one step to get a glimpse of an investment idea. There's even a reasonable chance that the hundreds of billions stored in the coffers of certain tech giants will be used to finance large-scale infrastructures to make sure the rise of AI won’t be held back by a silly power failure. Some traders have therefore dared to make the link between Microsoft and Vistra. I'd like to take this opportunity to remind you that several sectors are affected by this issue of power usage, and therefore of AI-driven optimization of energy consumption. This raises the same question for cryptocurrencies, for example: isn't it totally idiotic to burn up so much energy, only a tiny fraction of which ends up being of any real use? Personally, I know the answer, but we could probably write an encyclopedia on the subject.

In other news, investors will be treated today to the minutes of the latest Fed meeting. They have already learned that New Zealand's central bank is keeping its key rate at 5.50% (in case anyone outside New Zealand is interested), and that China is threatening to impose a 25% surtax on American and European cars in response to measures already announced in the US and about to be announced in Europe. On the geopolitical front, Norway and Ireland are reportedly preparing to recognize the existence of a Palestinian state.

In the Asia-Pacific region, Japan continues to blow hot and cold, with the Nikkei 225 down 0.9% this morning. China is rebounding limply after a clearly bearish session yesterday. South Korea, India and Australia are close to equilibrium, but slightly tinged with green. Taiwan stood out, gaining 1.5% to set a new record. Europe's indices are mostly in the red and futures on Wall Street are close to zero.

Today's economic highlights:

British inflation figures for April and US old home sales are on the agenda. 

The dollar is worth EUR 0.9233 and GBP 0.7861. The ounce of gold is firm at USD 2412. Oil retreats slightly, with North Sea Brent at USD 82.09 a barrel and US light crude WTI at USD 77.97. The yield on 10-year US debt falls to 4.41%. Bitcoin is trading at USD 69,500.

In corporate news:

  • Nvidia is due to publish its first-quarter results after the close of trading on Wall Street. Market observers expect the stock to fluctuate up or down in the $200 billion range in the days following the release.
  • Citigroup - British banking and financial regulators announced on Wednesday that they had fined the US bank over 61.6 million pounds (56.8 million euros) for breaches of controls and trading systems. This is one of the largest penalties ever imposed.
  • Amazon - The group's cloud computing division, Amazon Web Services (AWS), announced on Wednesday its intention to invest 15.7 billion euros in data centers in Spain, notably in the Aragon region. This project, whose duration was not specified, replaces the previous plan presented in 2021 of an investment of 2.5 billion euros.
  • Boeing - NASA announced on Tuesday evening a further postponement, to an unspecified date, of the launch of the first manned flight of Boeing's CST-100 Starliner capsule, to give engineers more time to investigate a helium leak.
  • Urban Outfitters gains 6.7% in pre-market trading after the group reports first-quarter sales ahead of analysts' expectations, against a backdrop of solid demand.
  • Lululemon Athletica fell by 4.2% in the pre-market after the group announced on Tuesday evening that its product manager, Sun Choe, would be leaving later this month.
  • Target, TJX and Analog Devices are due to publish their quarterly results before the opening of trading on Wall Street.

Analyst recommendations:

  • Akamai Technologies, Inc.: President Capital Management Corp downgrades to neutral from buy with a target price reduced from USD 125 to USD 108.
  • Ametek, Inc.: Oppenheimer upgrades to outperform from market perform with a target price of USD 200.
  • Campbell Soup Company: Bernstein upgrades to market perform from underperform with a price target raised from USD 42 to USD 46.
  • Kraft Heinz: Piper Sandler & Co upgrades to overweight from neutral with a target price of USD 42.
  • Prudential Financial, Inc.: Jefferies upgrades to buy from hold with a price target raised from USD 121 to USD 143.
  • Nxp Semiconductors N.v.: Wells Fargo maintains its overweight recommendation and raises the target price from USD 285 to USD 305.
  • Tyler Technologies, Inc.: BTIG maintains its buy recommendation and raises the target price from USD 515 to USD 550.
  • General Mills, Inc.: Bernstein upgrades to market perform from underperform with a price target raised from USD 62 to USD 70.
  • Zoom Video Communications, Inc.: HSBC maintains its buy recommendation with a target price reduced from USD 83 to USD 74.
  • Assura Plc: Jefferies downgrades to hold from buy with a target price reduced from GBX 52 to GBX 45.
  • Shopify Inc.: Goldman Sachs upgrades to buy from neutral with a target price raised from USD 67 to USD 74.