All global indices are moving within narrow bounds. Take the US Nasdaq 100 for example. It has just completed a weekly combo of "+0.06%", "+0.03%", "-0.02%". With its sequence of "-0.01%", "+0.38%", "0.10%", the Stoxx Europe 600 isn’t moving much either. The VIX volatility index fell below 17 points, something that has not happened since the beginnings of January 2022. Other indicators, such as Bank of America's, tell the same story by incorporating additional asset classes, such as commodities and foreign exchange.

On the western stock markets yesterday, the variations were therefore extremely contained on the surface. Paris, Frankfurt and Zurich gained a few points while London and New York lost some ground. There is still some activity on the lower floor, as earnings releases and sectoral events bring granularity... and some confusion, admittedly. Because this drop in volatility is paradoxically accompanied by a visibility that does not seem to be really improving. Investors are able, in the space of three days, to get excited about global momentum thanks to robust Chinese growth and then to drop oil on fears of recession. They like technology and cyclicals, but continue to invest in defensives.

Yesterday, the market stumbled a bit on the news that UK inflation remains stubbornly resilient. Consumer prices in the UK are still up 10.1% year-on-year. But the effect didn’t last, since investors consider the UK as a special case. The consensus on the evolution of US rates is fairly well cemented: a 25 bps increase at the beginning of May and the case will be closed, or almost. Investors saw no reason to change their plans after the release of the Fed's latest Beige Book yesterday, nor after comments from New York Fed boss John Williams.

In the end, it was Tesla that was the main story. The stock fell by 6% in after-hours trading after announcing lower margins in the first quarter. Analysts thought that in the current inflationary environment, prices could be cut without affecting margins. Strange reasoning. But Elon Musk doesn't care, because he has a plan to mass-produce vehicles to take over the ground that his rivals are struggling to conquer because they are not really up to speed on electric vehicles. I used the image of the jogging companion in a recent post to illustrate this. Tesla is a bit like that cruel colleague you run with from time to time, who slows down because you're dragging and then speeds up without forcing when you finally catch up with him. So when other manufacturers thought they'd done the hard part by releasing halfway decent electric models, the Californian accelerates by slashing prices, thanks to an unrivalled cost structure.

There are many corporate results to comment on today. Taiwan Semiconductor is on the agenda, as well as Philip Morris, AT&T and American Express.

The mixed batch of earnings received so far is weighing on US equities today, with futures on the Dow Jones down 0.5%, S&P 500 futures down 0.6%, and Nasdaq futures down 0.9%.

Meanwhile, data published today showed new unemployment claims rose to 245,000 in the week ended April 15 from 240,000 claims in the previous week, which is higher than estimates. The Philadelphia Fed Manufacturing index came in at-31.3 in April, while -19.2 was expected in the Bloomberg consensus. This compares to -23.2 in March.

 

Economic highlights of the day:

Weekly unemployment, the Philadelphia Fed's activity index and existing home sales are the main indicators today. All the agenda is here.

The dollar is down 0.2% against the euro and the pound to EUR 0.9110 and GBP 0.8030. The ounce of gold is back above USD 2000. Oil is down, with North Sea Brent at USD 81.84 a barrel and US WTI light crude at USD 78.03. The yield on US 10-year debt is at 3.59%. Bitcoin is down to USD 28,900.

 

In corporate news:

  • Tesla reported a lower-than-expected first-quarter gross margin on Wednesday, in the wake of a campaign of vehicle price cuts designed to stoke demand in a slowing economy and fend off growing competition. The stock was down 7.7% in pre-market trading and NIKOLA, RIVIAN and LUCID were down between 2.2% and 3.2% in its wake.
  • International Business Machines (IBM) beat Wall Street expectations for first-quarter profit and reported better-than-expected demand for IT services, sending its stock up 1.8% before the open.
  • AT&T fell nearly 4% in premarket trading after reporting lower-than-expected quarterly revenue on Thursday amid intensifying competition.
  • Blackstone on Thursday reported a 36% decline in first-quarter distributable earnings per share amid a slowdown in the housing market. The stock was down 1% in pre-market trading.
  • American Express was down 1.2 percent in pre-market trading after reporting first-quarter earnings per share of $2.40, compared with $2.66 expected. The company, however, confirmed its financial forecasts for the full year.
  • Philip Morris International - Marlboro Cigarette maker cut its full-year profit forecast on Thursday, citing higher tobacco leaf prices, energy and labour costs, which weighed on the stock, which was down 2 percent in premarket trading.
  • Alcoa was down 3.7% in premarket trading after reporting a larger-than-expected net loss and lower-than-expected sales for the first quarter.
  • Las Vegas Sands - The casino and hotel operator reported better-than-expected quarterly revenue, benefiting from increased attendance levels in Singapore and Macau.
  • Bed Bath & Beyond - fell 14.4% in premarket trading as the Wall Street Journal reported that the home goods retailer was preparing to file for bankruptcy as early as this weekend.
  • Zions Bancorporation - The regional bank was down 4.5 percent in premarket trading after it reported a lower-than-expected quarterly profit on Wednesday night, due in part to higher provisions to cover potential credit losses.

Analyst recommendations:

  • KeyBanc Adjusts Price Target on Microsoft to $335 From $316, Maintains Overweight Rating.
  • Bernstein Adjusts Price Target on Lockheed Martin to $496 From $478, Maintains Market Perform Rating.
  • KeyBanc Adjusts Price Target on ServiceNow to $547 From $520, Maintains Overweight Rating.
  • Oppenheimer Adjusts US Bancorp Price Target to $67 From $64, Maintains Outperform Rating.
  • TD Cowen Lowers Price Target on Elevance Health to $564 From $577, Maintains Outperform Rating.
  • TD Cowen Adjusts Price Target on Regeneron Pharmaceuticals to $885 From $875, Maintains Outperform Rating.
  • Oppenheimer Adjusts Morgan Stanley Price Target to $103 From $95, Maintains Outperform Rating.
  • Raymond James Adjusts Price Target on Abbott Laboratories to $123 From $116, Maintains Outperform Rating.
  • Barclays Adjusts Price Target on Crown Castle to $145 From $153, Maintains Equal-Weight Rating.
  • TD Cowen Lowers Price Target on Tesla to $150 From $170, Maintains Market Perform Rating.