It seems that Nvidia's stellar results weren't enough to put a smile back on the face of investors. The manufacturer of equipment essential to the development of artificial intelligence may have ended Thursday up 9%, but the rest of the US stock market sank into gloom. We have declines ranging from -1.53% for the Dow Jones to -0.44% for the Nasdaq. The S&P500 lost just -0.74%, but with only 10% of its components in the green. Removing the Nvidia cushion, the index would have lost more than twice as much, according to my very approximate calculations. While Nvidia was soaring to new heights, the losers were Boeing, whose shares plummeted by over 7%. The company has warned that it will be unable to return to positive cash flow this year. The market fears a further weakening of the stock, since Moody's recently assigned a negative outlook to the debt, which is close to being downgraded to speculative grade.

Strangely enough, investors are once again concerned about the evolution of US key rates. If I write strangely, it's because they should never have stopped doing so, even though they had relegated them to the background until Wednesday's publication of the minutes of the Fed's latest meeting. Nothing very original in the document, but officials seemed a little more worried about the evolution of inflation than expected. This slight resurgence of caution then took over as US central bankers argued along the same lines in their public statements yesterday. Not to mention stronger-than-expected PMI activity indicators in industry and, above all, services, which show that while the Fed has its foot on the brake, it's having a hard time getting the US economy to slow down. Let me remind you of basic market psychology: financiers hope for rate cuts that will make money cheaper and therefore more plentiful. The Fed will only be able to do this if inflation continues to fall. If the US economy remains too strong, monetary easing will be postponed, and the stock market will be unhappy.

This small surge in interest-rate pessimism was reflected in the dollar (which rose), gold (which fell) and bond yields (which rebounded). At the same time, bookmakers slightly revised their forecasts on the timing of the Fed's next decisions. The CME FedWatch tool, based on futures contracts, is almost 50/50 on a rate cut in September. Rate swaps, on the other hand, suggest that the first easing will wait until December. At the start of the week, the probability of a rate cut in September was 65% on the CME, while swaps suggested a rate cut in November. For the record, the Fed will meet on September 18, November 7 and December 18, 2024. These three dates are circled in red, as financiers no longer believe in a rate cut at the previous meetings on June 12 and July 31.

The mood is therefore a little more tense as the week draws to a close. Federal Reserve Governor Christopher Waller is scheduled to speak later this morning. In other news, Durable Goods Orders in the US rose 0.7% to $284.1 billion in April, the US Census Bureau said, which beats expectations for a decrease of 0.8%.

Almost everyone is down in Asia Pacific today. Japan lost 1%, Hong Kong and South Korea 1.2% and Australia 1%. Resistance is better in India, where the SENSEX is almost at equilibrium. European indices are clearly bearish, but futures on all three Wall Street indices are slightly in the green.

Economic highlights today:

Germany's quarterly GDP, retail sales outside the UK, US durable goods orders and the University of Michigan sentiment. The full agenda is here. 

The dollar is down to EUR 0.9224 and GBP 0.7863. The ounce of gold is worth USD 2339. Oil is stable, with North Sea Brent at USD 81.15 a barrel and US light crude WTI at USD 76.68. The yield on 10-year US debt rises to 4.49%. Bitcoin is trading at USD 67,400.

In corporate news:

  • Apple advances 0.5% in pre-market trading on the back of Wedbush's target price increase to $275, as the intermediary sees opportunities for the iPhone maker in the monetization of artificial intelligence (AI) technologies and an improving situation in China.
  • Nvidia - The artificial intelligence (AI) chip designed by Nvidia for the Chinese market has made a lukewarm start against a backdrop of oversupply, forcing the American semiconductor giant to offer its product at a lower price than one of its competitor Huawei's chips, sources familiar with the matter told Reuters. Nvidia shares, which climbed more than 9% on Thursday after the company's results, nonetheless gained 0.5% in pre-market trading on Friday.
  • Tesla has reduced Model Y production at its Shanghai plant by a double-digit percentage since March, according to a source and industry data. Data from the China Association of Automobile Manufacturers (CAAM) show that Model Y production in China totaled 49,498 units in March and 36,610 in April, down 17.7% and 33% respectively year-on-year.
  • Micron Technology - On Thursday, a US court ordered the chipmaker to pay $445 million in damages to computer memory company Netlist in a patent lawsuit.
  • KKR - The US investment fund is expected to obtain unconditional EU approval to buy Telecom Italia's (TIM) fixed-line network after agreeing to maintain commercial agreements with the Italian incumbent's competitors, sources with direct knowledge of the case said.
  • Workday falls 12.2% in pre-market trading as the group lowers its fiscal 2025 subscription revenue forecast to a range of $7.70 to $7.73 billion, against a previous range of $7.73 to $7.78 billion and an analyst estimate of $7.76 billion, according to LSEG data.
  • Ross Stores jumped 6.4% in pre-market trading, as the retailer reported first-quarter earnings per share of $1.46 versus the LSEG consensus of $1.35.

Analyst recommendations:

  • Cintas Corporation: Citi downgrades to sell from neutral with a price target raised from USD 530 to USD 570.
  • Dollar General Corporation: R5 Capital downgrades to hold from sell with a price target raised from USD 102 to USD 144.
  • Dupont De Nemours, Inc.: Wells Fargo upgrades to overweight from equalweight with a target price raised from USD 80 to USD 103.
  • Fox Corporation: Baptista Research downgrades to hold from buy with a price target raised from USD 35.10 to USD 35.60.
  • Microchip Technology, Inc.: Mizuho Securities upgrades to buy from neutral with a price target raised from USD 85 to USD 115.
  • Nvidia Corporation: DZ Bank AG Research downgrades to hold from buy with a price target raised from USD 870 to USD 1025.
  • Nxp Semiconductors N.v.: Mizuho Securities upgrades to buy from neutral with a price target raised from USD 265 to USD 325.
  • Occidental Petroleum Corporation: Gerdes Energy Research LLC upgrades to buy from neutral with a target price of USD 75.
  • Roblox Corporation: Baptista Research downgrades to buy from hold with a price target reduced from USD 50 to USD 40.10.
  • Analog Devices, Inc.: Goldman Sachs maintains its buy recommendation and raises the target price from USD 205 to USD 252.
  • Warner Music Group Corp.: Baptista Research downgrades to buy from hold with a price target reduced from USD 40.60 to USD 39.60.
  • The Home Depot, Inc.: R5 Capital maintains its sell recommendation with a price target raised from USD 248 to USD 315.
  • Epam Systems, Inc.: Redburn Atlantic initiates a neutral recommendation with a target price of USD 195.
  • Aviva Plc: HSBC downgrades to hold from buy with a price target raised from GBP 5.05 to GBP 5.25.
  • Easyjet Plc: AlphaValue/Baader Europe upgrades to buy from add with a target price of GBX 614.
  • Mondi Plc: Citi upgrades to buy from neutral with a price target raised from GBP 17 to GBP 21.
  • Persimmon Plc: Investec upgrades to buy from hold with a price target raised from GBX 1390 to GBX 1520.
  • The Berkeley Group Holdings Plc: Investec downgrades to hold from buy with a target price raised from GBX 5200 to GBX 5400.
  • The Toronto-Dominion Bank: CIBC Capital Markets upgrades to outperform from neutral with a target price raised from CAD 83.50 to CAD 88.
  • Uber Technologies, Inc.: Baptista Research upgrades to buy from hold with a price target raised from USD 79.20 to USD 86.10.