Wall Street indices struggled for direction on Thursday, before capitulating to end the day on their lows. The long-awaited speech by the Fed chairman lived up to its promise.

Investors went through the motions as they listened to the comments. Powell stated that "geopolitical tensions are very high and pose significant risks... The FOMC is proceeding cautiously given the risks and the hikes made so far". This led traders to buy frantically.

But then, Powell said something like "further evidence of the strength of the economy may justify a rate hike... There are signs that monetary policy is not too tight at the moment". A big chill hit, and the indices start to drop again.

After that, Powell said "The Fed needs to let rising yields play out, watch them... At the margin, rising yields could mean less need to raise interest rates". Again, traders pressed the buy button.

But Powell concluded with a reminder that "signs of sustained above-trend growth, or that labor market strains are no longer abating, could jeopardize further progress on inflation and justify a further tightening of monetary policy". Indices fell back again, remaining in the red zone until the close. The Dow Jones, S&P500 and Nasdaq 100 lost around 0.8% yesterday.

On a more serious note, all the market took from yesterday's speech is that the Fed will not be raising rates in November, but that it is keeping the possibility open for the future, and that it is still not very comfortable with the economic outlook. To put it more plainly, it has no bloody idea where things are actually heading. BofA Global Research said it now expects a Fed rate hike of 25 basis points in December instead of November. According to the CME Fedwatch tool, investors now see a 98% chance the Fed will keep rates unchanged in its November meeting, and they still see a 74% chance that rates will remain unchanged in December.

The combination of rising tensions in the Middle East and the Fed's stance briefly led the yield on the US 10-year bond to 5%. It has since contracted again. But not enough to reverse the current bond crisis, since bond prices fall when yields rise. The dollar is curiously stable, but gold is in the process of making a rapid ascent towards USD 2,000 an ounce. Oil, meanwhile, is back on its recent highs, with Brent crude breaking through the USD 93 ceiling.

There have been many company announcements in 24 hours and not all of them good surprises. Hewlett Packard Enterprise, for example, disappointed. This follows mediocre figures from Tesla. Today, American Express delivered really strong results as the US consumer continues to spend like there’s no tomorrow.

Investors will be scrutinizing comments from Philadelphia Fed President Patrick Harker and Cleveland Fed President Loretta Mester today, before Fed officials enter their traditional period of silence on Saturday ahead of their meeting on November 1.

Economic highlights of the day:

The German producer price index and British retail sales and are on the agenda. 

The dollar is trading at EUR 0.9447 and GBP 0.8235. The ounce of gold continues its ascent to USD 1978. Oil too, with North Sea Brent at USD 93.37 a barrel and WTI light crude at USD 89.42. The yield on 10-year US debt fell to 4.94%. Bitcoin trades at USD 29,800.

In corporate news:

  • American Express reported third-quarter earnings of 2.45 billion dollars in the third quarter, or 3.30 per share, compared with $1.88 billion or $2.47 per share a year earlier. On average, analysts expected earnings of $2.94 per share.
  • European Union antitrust regulators resumed their investigation their investigation into Adobe's proposed $20 billion takeover of Figma, giving themselves until February 5 to take a decision.
  • Toyota Motor, the world's largest carmaker in the world in terms of sales, said on Thursday that it had signed an agreement to adopt the Tesla charging standard from 2025.
  • Hewlett Packard Enterprise is down 3.7% after the close, with the company forecasting adjusted earnings per share for fiscal 2024 of between $1.82 and $2.02, below the $2.14 consensus.
  • Vietnamese electric vehicle manufacturer Vinfast said on Friday that it had signed a share subscription agreement of up to $1 billion with the with US fund Yorkville Advisors.
  • Eli Lilly said on Thursday that it was suing 11 online pharmacies to prevent them from importing, selling and distributing products imitating its diabetes drug Mounjaro, which is expected to be approved for its weight-loss later this year.
  • Solaredge falls by 22% before the opening after warned of a significant drop in fourth-quarter revenues.

Analyst recommendations:

  • Aj bell: Investec maintains its buy recommendation with a target price reduced from GBX 385 to GBX 380.
  • Blackstone: JP Morgan maintains its neutral recommendation with a price target reduced from USD 108 to USD 94.
  • Cognizant: Citi upgrades to buy from neutral with a price target raised from USD 72 to USD 80.
  • Crown castle: Goldman Sachs maintains its neutral recommendation with a price target reduced from USD 94 to USD 90.
  • Discover financi: Goldman Sachs maintains its buy recommendation with a price target reduced from USD 103 to USD 102.
  • Enphase energy: BNP Paribas Exane maintains its neutral recommendation with a target price of USD 131.
  • Epam systems: JP Morgan maintains its overweight recommendation and reduces the target price from USD 319 to USD 301.
  • First solar: BNP Paribas Exane maintains its outperform recommendation with a target price of USD 237.
  • Genuine parts co: Evercore ISI maintains its in-line recommendation with a price target reduced from USD 155 to USD 145.
  • Halliburton: Baptista Research maintains its hold recommendation with a target price of USD 49.
  • Hargreaves lans: Investec maintains its buy recommendation with a target price reduced from GBX 1225 to GBX 1190.
  • Hca healthcare: Baptista Research maintains its outperform rating with a target price of USD 281.20.
  • Humana: Morningstar downgrades to hold from buy with a target price of USD 550.
  • Intuitive surgic: Raymond James maintains its outperform rating and reduces the target price from USD 368 to USD 310.
  • Marsh & mclennan: Goldman Sachs maintains its buy recommendation with a price target reduced from USD 218 to USD 215.
  • Morgan stanley: Wolfe Research upgrades to peerperform from underperform.
  • Netflix: Phillip Securities upgrades to accumulate from neutral with a price target raised from USD 446 to USD 455.
  • Oneok: Morningstar downgrades to sell from hold with a target price of USD 62.
  • Rentokil initial: Societe Generale maintains its sell recommendation and reduces the target price from GBX 480 to GBX 450.
  • Salesforce: Fubon Securities initiates a buy recommendation with a target price of USD 251.
  • Sherwin-williams: Evercore ISI maintains its outperform rating and reduces the target price from USD 290 to USD 275.
  • Solaredge techno: Goldman Sachs downgrades to neutral from buy with a price target reduced from USD 254 to USD 131.
  • Tesla: Daiwa Securities maintains its outperform rating and reduces the target price from USD 290 to USD 250.
  • Tractor supply: Telsey Advisory Group maintains its outperform rating and reduces the target price from USD 265 to USD 245.
  • Truist financial: Goldman Sachs maintains its buy recommendation with a price target raised from USD 34 to USD 35.
  • Union pacific corp: Deutsche Bank upgrades to buy from hold with a price target raised from USD 223 to USD 235.
  • Waste connection: BMO Capital Markets maintains its outperform rating with a price target reduced from USD 162 to USD 158.
  • Waste management: BMO Capital Markets maintains its market perform recommendation with a price target reduced from USD 166 to USD 160.