There seems to be no stopping US tech stocks. The Nasdaq 100 gained 1.2% yesterday and the S&P500 almost 0.8%. Highs after records make new records. The S&P500 has already exceeded its peaks 30 times this year. I'm repeating myself, but big tech companies are the big winners. The US broad index gained 3.8% in one month, while its equally-weighted counterpart lost 2%. This difference can be explained by the rise in the index's large caps. Mid-caps are still struggling - the Russell 2000 index, which tracks them, has been at 0 since January 1. Wall Street professionals are both frightened and magnetized by this headlong rush. Yesterday, Goldman Sachs raised its target for the S&P500 to 5600 points by the end of the year. Evercore ISI is targeting 6000. The market sees no reason why things can't get even better if the Fed starts cutting rates in the last quarter of 2024. It's a powerful engine, even if it hasn't yet managed to electrify the entire odds.

Federal Reserve bankers have refocused their rhetoric on a single rate cut this year, and the strong economic landscape reinforces this suggestion, with futures markets reducing their expectations of two cuts. The forecast for the Fed's easing by the year's end now stands at 44 basis points.

Philadelphia Fed President Patrick Harker, speaking on Monday, said that If things unfold as projected, one rate cut would be appropriate by year's end.

However, there are signs that the US economy is cooling. The latest one is US retail sales, published this morning, which grew less than expected in May, by 0.1% last month after a downwardly revised 0.2% drop in April, the Commerce Department's Census Bureau said. The Reuters consensus of economists was calling for a 0.3% gain in May.

Elsewhere, the Reserve Bank of Australia has maintained its key interest rates at a 12-year high of 4.35% for the fifth consecutive meeting, underscoring the need to remain vigilant on inflation. It said a rate cut not fully expected until April or May of the following year.

Europe has other problems. France has become the epicenter of investor worries. President Emmanuel Macron has caused an earthquake calling for the dissolution of the French lower house. The far left and far parties are leading the poll, and a big win for either of those parties could lead to significant political and economic instability for the EU’s second largest economy. There are still ten days to go before the first-round vote. In the meantime, investors are reducing their exposure and those who remain attached to France are looking for the safest players.

Nonetheless, European markets took a breather yesterday, helped by the rebound of the Paris Bourse and some stable performances. The CAC40 recovered 0.9% after sinking 2.7% on Friday. The stocks that came under the most severe attack last week recovered a little, but it's hard to be complacent given the high level of political uncertainty.

Today's macroeconomic news is dominated by retail sales, industrial production and business inventories in the US. There will also be plenty of speeches from US central bankers, on the eve of Juneteenth, when Wall Street will be closed.

In Asia Pacific, Tokyo rebounded after an unsuccessful first session this week. In China, we take yesterday's results and reverse them: Hong Kong retreats slightly, while Shanghai gains a little. The strength of Wall Street's tech sector supports Korea's KOSPI and Taiwan's TAIEX. Australia ended up 0.9%. European indices are in the green and futures on Wall Street are unchanged.

Economic highlights of the day:

The second reading of May inflation in the eurozone and the ZEW index of German financial confidence are on the agenda, along with US retail sales, industrial production and business inventories. The full agenda is here.

The dollar is worth EUR 0.9320 and GBP 0.7881. The ounce of gold is stable at USD 2,322. Oil remains firm, with North Sea Brent at USD 84.17 a barrel and US light crude WTI at USD 79.67. The yield on 10-year US debt rises to 4.27%. Bitcoin trades at USD 65,200.

In corporate news:

  • Boeing - Group CEO Dave Calhoun appears before the U.S. Senate Permanent Subcommittee on Investigations on Tuesday to discuss the company's safety policies and new complaints.
  • Tesla - Elon Musk told group employees on Monday that the electric-vehicle maker was working on stock-based compensation for top performers, according to two sources who consulted an internal memo.
  • A consortium consisting of US investment fund KKR and Singapore Telecommunications will invest S$1.75 billion (€1.21 billion) in ST Telemedia Global Data Centres, one of Asia's largest data center providers, the parties announced on Tuesday.
  • Merck announced on Monday that the U.S. Food and Drug Administration had approved its next-generation pneumococcal vaccine for adults.
  • Berkshire Hathaway, Warren Buffett's group, acquired an additional 2.95 million shares in Occidental Petroleum, bringing its stake in the US oil producer to almost 29%.
  • Exxon Mobil - A U.S. judge on Monday dismissed Exxon Mobil's lawsuit against activist group Arjuna Capital, after the latter "unconditionally and irrevocably" waived its right to submit a proposal on the oil company's greenhouse gas emissions.
  • Lennar fell by 3.4% in pre-market trading, as the US homebuilder announced on Monday evening that it expected third-quarter deliveries to fall short of analysts' expectations, a sign that demand for new homes is likely to remain weak at a time when real estate rates are at 20-year highs.

Analyst recommendations:

  • 3M Company: Baptista Research upgrades to outperform from hold with a price target raised from USD 108.90 to USD 118.
  • Apple Inc.: Phillip Securities downgrades to neutral from accumulate with a price target raised from USD 194 to USD 220.
  • Kroger Co. (The): BMO Capital Markets upgrades to outperform from market perform and raises the target price from USD 58 to USD 60.
  • Broadcom Inc.: Daiwa Securities maintains its outperform recommendation and raises the target price from USD 1336.10 to USD 2000.
  • Crh Plc: Stephens initiates an overweight recommendation with a target price of USD 95.
  • Veralto Corporation: TD Cowen initiates a Hold recommendation with a target price of USD 95.
  • Paragon Banking Group Plc: Redburn Atlantic upgrades to buy from neutral with a price target raised from GBX 770 to GBX 970.