Wall Street indices ended in the green yesterday, partly due the absence, for the time being, of escalation in the Middle East. A relative easing was also evident in oil prices, which corrected quite sharply. As is often the case, the Nasdaq was the driving force, gaining nearly 1%. Investors are fairly confident in the results of the big digital players. However, while the creator of the overbearing but indispensable Windows gained 4% post-trade after posting its results, the owner of the just as overbearing but indispensable Google fell 6%. What the two companies had in common, however, was that they both exceeded earnings forecasts. But Microsoft exceeded them on the strength of artificial intelligence and the cloud, while Alphabet was strong on advertising but weak on the cloud and unspecific about AI. The market believes that Bill Gates' baby is still one step ahead of the competition, thanks to the initiatives launched early on with OpenAI. A note of common sense: if you're launching a company in 2023, don't forget to repeatedly use the words "artificial intelligence", even if your use of AI is limited to asking ChatGPT to write your website footer. Microsoft's solid results should overshadow Alphabet's mishap, because they maintain the dominant narrative about the promise of AI.

While we're on the topic of quarterly results, there's a deluge of earnings reports today, including Boeing, Meta and IBM. So far, I see a certain polarization in performance, with companies doing well as they successfully raised their prices, compensating for a slowdown in business, and other companies warning or struggling to justify the hopes placed in them. Boeing, Meta and IBM will complete the picture in the US later today.

The other big story of the day is the revival of Chinese equities following a series of economic stimulus packages. It's not exactly an explosion either, as the initial copious stock market gains have dried up a little. Basically, Beijing has largely relaxed the percentage of deficit allowed to finance the economy, which will allow more sovereign debt to be raised by the end of the year. Country insiders point out that it is extremely rare for China to change the rules of the fiscal game during the course of the year, a sign that the Communist Party has decided to send out a strong signal. At the same time, Hong Kong announced a reduction in property taxes and a cut in stamp duty on stock market transactions, in the hope of reviving two sluggish sectors of its economy. Meanwhile, developer Country Garden officially defaulted on a dollar bond.

Economic highlights of the day:

Germany's Ifo business confidence index and US new housing figures for September are on the agenda, along with weekly oil inventories.

The euro is back at 1.0602 USD. The ounce of gold is firm at 1973 USD. Oil falls, with North Sea Brent at 87.10 USD a barrel and WTI light crude at 83.64 USD. The yield on 10-year US debt is stable at 4.84%. Bitcoin falls to 34,060 USD.

In corporate news:

  • Alphabet - Third-quarter sales exceeded Wall Street expectations on Tuesday, thanks to higher advertising spending and resilient demand for dematerialized services, which nevertheless grew at their slowest pace in eleven months. Sales amounted to $76.69 billion, against estimates of $75.97 billion. The share price declined by 6.9% before the opening.
  • Microsoft beat Wall Street forecasts for first-quarter sales on Tuesday, thanks to growth in its cloud computing and office software businesses. The company's sales rose by 13% to $56.5 billion, against analysts' expectations of $54.52 billion. The share price rose by 3.2% before the opening.
  • Visa - Fourth-quarter earnings beat estimates on Tuesday, as consumers continued to dine and travel despite inflation. On an adjusted basis, the group reported earnings of $2.33 per share for the quarter. Analysts were expecting an average of $2.24 per share. The share price declined by 1.2% before the opening.
  • Texas instruments - On Tuesday, the analog chipmaker reported fourth-quarter sales below Wall Street estimates, as demand suffers in its main markets. The company expects sales of between $3.93 billion and $4.27 billion, against a consensus of $4.49 billion. The share price declined by 4.6% before the opening.
  • Snap expects fourth-quarter sales of between $1.32 billion and $1.38 billion, following higher-than-expected sales and user growth in the third quarter. Analysts were expecting sales of $1.33 billion. The share price rose by 1.8% before the opening.
  • Hilton Worldwide raised its full-year adjusted profit forecast on Wednesday, as the hotel operator expects demand for standby travel to support earnings. The company now expects full-year adjusted earnings of between $6.04 and $6.09 per share, compared with a previous estimate of $5.93 to $6.06 per share.
  • Thermo Fisher Scientific - The medical equipment manufacturer cut its annual profit forecast on Wednesday, penalized by weaker-than-expected demand for its services. The company now expects adjusted earnings of $21.50 per share in 2023, compared with a previous forecast of $22.28 to $22.72 per share.
  • CME Group reported a rise in third-quarter earnings on Wednesday, as traders used its products to hedge against market volatility. On an adjusted basis, net income rose to $807.8 million, or $2.25 per share, for the quarter ended September 30, from $710.0 million, or $1.98 per share, a year earlier.
  • Boeing quarterly results are expected before the opening. META PLATFORMS quarterly results are expected after the close.
  • Amazon Web Services (AWS) said Wednesday it would launch a sovereign cloud solution in Europe for governments and customers in highly regulated industries.
  • General Electric - In an interview, CEO Larry Culp said GE was targeting a 20% to 25% year-on-year increase in deliveries of LEAP jet engines used on medium-haul aircraft for 2024, up from 40% to 45% this year. The company had previously forecast 50% growth in 2023.
  • Qualcomm gave details on Tuesday of a chip designed for Microsoft’s notebooks and available from next year. The chip has been redesigned to better handle artificial intelligence tasks, and is said to be faster than some of Apple's competitors' chips.
  • General Motors- Honda Motor is abandoning plans to develop low-cost electric vehicles with the US automaker due to the changing business environment, Bloomberg News reported on Wednesday.
  • Sunpower - The solar company falls 9.5% before the open, after declaring that its unaudited financial reports for the first and second quarters of 2023, as well as its audited annual report for the period ending January 1, 2023, should no longer be used.
  • Banking Sector - The Federal Reserve is expected to propose on Wednesday a review of the fees banks can charge retailers for card transactions, which generated around $24.31 billion for the sector in 2019, according to the Fed's most recent data.

Analyst recommendations:

  • Albemarle corp: Piper Sandler & Co downgrades to neutral from overweight with a price target reduced from USD 255 to USD 155.
  • Alphabet inc-a: Morningstar downgrades to hold from buy with a target price of USD 161.
  • Alphabet inc-c: Morningstar downgrades to hold from buy with a target price of USD 161.
  • Citizens financi: Piper Sandler & Co downgrades to neutral from overweight with a price target reduced from USD 29 to USD 26.
  • Corning inc: Deutsche Bank downgrades to hold from buy with a price target reduced from USD 37 to USD 30.
  • Enbridge inc: Wells Fargo downgrades to underweight from equalweight with a price target reduced from CAD 50 to CAD 43.
  • Gap: Wells Fargo Securities analyst Ike Boruchow raised the recommendation on Gap Inc. to overweight from equal-weight. PT set to $16, implies a 29% increase from last price.
  • Hershey co/the: Stifel maintains its hold recommendation and reduces the target price from USD 250 to USD 210.
  • Illinois tool wo: Morningstar upgrades to hold from sell with a price target raised from USD 203 to USD 211.
  • Microsoft corp: Goldman Sachs maintains its buy recommendation and raises the target price from USD 400 to USD 450.
  • Mondi plc: Barclays downgrades to underweight from equalweight with a price target reduced from GBP 14.85 to GBP 11.50.
  • Paccar: Morningstar upgrades to hold from sell with a price target raised from USD 74 to USD 80.
  • Progressive corp: BMO Capital Markets upgrades to outperform from market perform and raises the target price from USD 155 to USD 180.
  • Regions financia: Piper Sandler & Co downgrades to neutral from overweight with a price target reduced from USD 17 to USD 15.
  • Softcat plc: Numis upgrades to add from buy with a target price of GBX 1620.
  • Spotify technolo: Macquarie maintains its outperform recommendation with a price target raised from USD 185 to USD 210.
  • Tc energy corp: Wells Fargo upgrades to overweight from equalweight with a price target raised from CAD 47 to CAD 54.
  • Texas instrument: Rosenblatt Securities Inc. maintains its buy recommendation and reduces the target price from USD 230 to USD 190.
  • Verizon communic: Barclays upgrades to overweight from equalweight with a price target raised from USD 37 to USD 38.