August’s inflation figures in the U.S. didn’t settle the ongoing debate. On one side, some believe the U.S. economy is headed for disaster, and they blame the global economy or the Fed. On the other, there are those who think the U.S. will continue to grow in fits and starts, despite the Fed’s efforts. Consumer prices remained stable overall, as expected, but certain sub-categories saw slight increases that weren’t fully anticipated. As a result, the numbers can be interpreted in many ways, as commentators did yesterday. Ultimately, the market concluded that August inflation supports a moderate scenario, with the expectation that the Fed will cut rates by a quarter-point next week. Investors have been wavering between a quarter-point and a half-point rate cut recently.

The Nasdaq 100 bounced back by 2% and the S&P 500 gained 1.1%, largely thanks to major tech stocks, especially Nvidia, which saw an 8% rebound. However, Nvidia’s CEO, Jensen Huang, mentioned in an interview that customers are frustrated by product shortages. This could be interpreted in two ways. The negative view: customers might turn to other suppliers. The real view: customers don’t have other options, which signals 1) demand far exceeding supply, and 2) a strong position for Nvidia to maintain its margins.

Not all tech stocks fared well. Trump Media & Technology Group, the company behind Donald Trump’s Truth Social network, dropped 10.5% to its lowest point since November 2023. The challenge with a company tied so closely to a single individual is that when popularity wanes, so does the stock price. Investors seem to agree with political analysts: Ms. Harris outperformed Mr. Trump in the recent televised debate. However, Trump remains resilient, and things could still change. For now, though, Trump Media, or “TMTG,” reflects Trump’s political fortunes. It’s not the company’s financial performance—$58 million in losses last year on $4.1 million in sales—that will support the stock.

In Europe, markets had mixed results yesterday. Performances ranged from a 0.35% decline in Switzerland to a 1.5% gain in Copenhagen. Paris dipped slightly, while Frankfurt recovered 0.3% after dropping the previous day following BMW’s major warning. The eurozone is now awaiting the ECB’s monetary policy decision, due this Morning. The central bank is expected to announce a second rate cut of a quarter point, following June’s initial cut. The decision will be revealed at 8:15 a.m., with a press conference at 8:45 a.m. This rate-cutting cycle is seen as crucial for reigniting growth in Europe and easing pressure on the real estate market. Analysts will be closely monitoring Christine Lagarde’s comments for clues about the ECB’s next steps. Also on today’s agenda are U.S. employment and producer price figures, both out at 8:30 a.m. Investors are watching these closely for any signs of a shift in the labor market ahead of next week’s Fed meeting, as well as for indications of reduced inflationary pressure in the PPI data.

Lastly, a word on oil, which finally rebounded thanks to Francine. No, I’m not talking about greed this early in the morning. Francine is a tropical storm currently sweeping through the northern Gulf of Mexico, leading to the precautionary closure of several offshore platforms. As a result, oil prices bounced back, with WTI and Brent both gaining 2%, halting their recent decline.

In the Asia-Pacific region, the Nasdaq’s recovery gave a boost to several markets. Tokyo jumped 3.3% after a series of declines, while China saw gains of 0.3% in Shanghai and 1.2% in Hong Kong. South Korea (+1%) and Taiwan (+3.3%) also benefited from the recovery in the semiconductor sector, and Australia rose 1%. India was more restrained, with the SENSEX up 0.4%. European markets are expected to open with a rebound.

Economic highlights of the day

The European Central Bank's announcements on deposit, refinancing and marginal lending rates are scheduled for 8:15am., before the decision presentation conference starting at 8:45 a.m. In between in the US, new jobless claims and the producer price index will be announced at 8:30m. Full agenda here. 

The dollar is worth EUR 0.9074 and GBP 0.7659. The ounce of gold remains firm at USD 2,515. Oil is up, with North Sea Brent at USD 71.59 a barrel and US light crude WTI at USD 68.32. The yield on 10-year US debt is at 3.66%. Bitcoin is trading just under USD 57,950.

    In corporate news:

    • Boeing could face a strike as early as Friday if the majority of employees in the northwestern United States vote Thursday in favor of a work stoppage.
    • Electronic Arts, Roblox, Activision Blizzard owned by Microsoft, and four other groups are being targeted by a consumer complaint from European players accusing them of encouraging users to spend money.
    • Eli Lilly will invest $1.8 billion in two manufacturing sites in Ireland to increase production of its obesity drug and an Alzheimer's treatment, the pharmaceutical company said on Thursday.
    • IBM said on Wednesday that it expects to incur a one-time charge of approximately $2.7 billion before taxes in the third quarter as part of a pension plan transfer agreement with Prudential.
    • Johnson & Johnson – The U.S. Food and Drug Administration has approved the expanded use of the company's drug, Tremfya, to treat adults with a type of chronic inflammatory bowel disease, the company announced on Wednesday.
    • Moderna said on Thursday it expects revenue between $2.5 billion and $3.5 billion next year and estimates that the launch of new products will lead to an average annual revenue growth rate of 25% between 2026 and 2028.
    • US Bancorp announced a $5 billion share buyback program and an increase in its quarterly dividend on Thursday. The stock rose 1.1% in pre-market trading.

    Analyst recommendations:

    • American Tower: Mizuho Securities maintains a neutral recommendation with a price target raised from 205 to USD 221.
    • Analog Devices: Zacks maintains a neutral recommendation with a price target reduced from USD 235 to USD 230.
    • Blackstone: Wells Fargo initiates an overweight recommendation with a target price of USD 163.
    • British Land Company: Jefferies maintains its underperform recommendation with a price target raised from 310 to GBX 317.
    • Cintas: Morgan Stanley maintains its market weight recommendation and reduces the target price from 625 to USD 156.25.
    • Diamondback Energy: Gerdes Energy Research LLC upgrades to buy from neutral with a target price raised from USD 204 to USD 205.
    • Equifax: Morgan Stanley maintains its market weight recommendation and raises the target price from USD 250 to USD 271.
    • Equinix: Mizuho Securities maintains its outperform recommendation and raises the target price from USD 873 to USD 971.
    • Factset Research Systems: Wolfe Research maintains its underperform recommendation and raises the target price from 400 to USD 410.
    • Franklin Resources: Goldman Sachs maintains its sell recommendation with a price target raised from 23.50 to USD 23.75.
    • Invesco: Goldman Sachs maintains a neutral recommendation with a price target raised from USD 17 to USD 17.25.
    • Johnson Controls International: Baird maintains its neutral recommendation with a price target raised from 72 to USD 78.
    • J.P. Morgan Chase: Morgan Stanley maintains its overweight rating and reduces the target price from USD 226 to USD 220.
    • Land Securities Group: Jefferies remains underperform with a price target raised from 504 to GBX 515.
    • Nasdaq: Jefferies remains at hold with a price target raised from 60 to USD 68.
    • Rentokil Initial: Barclays maintains its overweight recommendation and reduces the target price from 6.40 to GBP 6.
    • Simon Property Group: Stifel downgrades to hold from buy and raises the target price from USD 157.50 to USD 159.
    • T-Mobile US: Wells Fargo maintains its overweight rating and raises the target price from USD 200 to USD 230.
    • Trane Technologies: Baird maintains a neutral recommendation with a price target raised from USD 360 to USD 365.
    • TransUnion: Morgan Stanley maintains its overweight rating and raises the target price from USD 96 to USD 103.
    • Western Digital: Citigroup maintains its buy recommendation with a price target raised from USD 85 to USD 95.