Just today, AT&T exceeded Wall Street expectations for subscriber numbers and free cash flow in the first quarter. Humana also exceeded first-quarter earnings expectations, helped by the resilience of its insurance business for the elderly. Hilton Worldwide raised its adjusted annual earnings forecast, betting on demand for international travel. In addition, Bunge also topped expectations for first-quarter earnings.

This good economic news is good news for investors. But sometimes, bad economic news is also good news for equity markets. The leading PMI activity indices for April showed that the strength of the services sector is weakening and that manufacturing momentum in the US has moved into the red zone. This was all it took for the equity market to jump to the conclusion that the economic situation was deteriorating, and that the Fed could not keep rates so high for too long.

The reasoning is pretty weak, and once again raises the question of market overreaction to the slightest deviant indicator. That didn't stop the Nasdaq 100 from recovering 1.5% on Tuesday after gaining 1% the previous day. This wiped out Friday's 2% dip. The same was true of the S&P500, which climbed 1.2%. In Europe, the stock markets had already begun to recover, no doubt because the old continent believes that the European Central Bank does not have the same constraints as the Fed when it comes to easing monetary policy. The British Footsie even broke through a new ceiling.

The equity markets have got their heads back on straight, even if the bond killjoys continue to tell them: get back to reality on monetary policy, the PMI indicators haven't changed the game yet. It's true that the fixed-income market is a little harder to move than the nimble equities market.

Meanwhile, earnings season continues, with Meta Platforms later today, and Microsoft and Alphabet the following day. Tesla’s results were published yesterday. Following the publication of its first-quarter results, the stock soared 13% in after-hours trading, having lost 40% since the start of the year. The figures were even worse than expected, with sales down, operating margin at an all-time low and cash consumption very high. The market was expecting disaster, so there were no surprises there. On the other hand, the rebound was fueled by Elon Musk's incantations. The CEO confirmed that Tesla would be stepping up its efforts to bring out cheaper vehicles sooner than expected, which put the famous low-cost car back in the saddle, as rumors had it. Unless it's cheaper versions of current vehicles? All this is still unclear, but Musk’s comments have overtaken the earnings report to offer the stock a recovery. With a valuation of 60 times cash earnings expected in 2025, we're going to have to get real at some point.

In Asia Pacific this morning, indices are following in Wall Street's wake. Japan, Taiwan, South Korea and Hong Kong are taking advantage of the situation to post very big rebounds of about 2%. Mainland China, India and Australia are barely breaking even. At the opening, European leading indicators are mixed, and so are futures on Wall Street, from -0.1% for the Dow Jones to +0.5% for the Nasdaq 100.

Economic highlights of the day:

The German IFO Business Climate, US durable goods orders and the DOE crude inventories are scheduled today. The full agenda is here.

The dollar is trading at EUR 0.9356 and GBP 0.8040. The ounce of gold is standing at USD 2,321. Oil is stable, with North Sea Brent at USD 88.33 a barrel and US light crude WTI at USD 83.12. The yield on 10-year US debt remains at 4.62%. Bitcoin is trading at USD 66,133.

In corporate news:

  • Tesla jumped 10.7% in pre-market trading despite the publication of lower-than-expected quarterly sales, with the announcement that the automaker was accelerating the launch of new vehicle models taking precedence over results.
  • Texas Instruments climbed 7% in pre-market trading, as the group announced that it expected sales for the current quarter to exceed analysts' estimates, noting a recovery in demand for its semiconductors. In its wake, Arm Holdings advanced by 3.7%, Super Micro Computer by 3%, Marvell Technology by 1.7%, Micron Technology and Advanced Micro Devices by 1.2% each.
  • Social Networks - Meta Platforms and Snap each gained around 2% in pre-market trading, the US Senate having voted Tuesday evening by a large majority in favor of the bill giving TikTok's Chinese owner, ByteDance, nine months to a year to sell its US assets or face a ban. Alphabet, which will publish its results after the Wall Street close, is up 0.1% in pre-market trading.
  • Visa gains 2.4% in premarket trading after reporting quarterly earnings and sales ahead of Wall Street expectations on Tuesday, as easing fears of an economic slowdown support consumer spending.
  • Boston Scientific - The medical device manufacturer raised its annual earnings forecast on Wednesday, as the company counted on resilient demand for its cardiac devices. The stock gained more than 45% before the opening.
  • Boeing - Japan Airlines will continue to use aircraft produced by Airbus and Boeing, President Mitsuko Tottori said on Wednesday. Korean Air is also in talks to buy at least 10 Boeing 777Xs, according to two industry sources.
  • Hasbro reported a smaller-than-expected drop in first-quarter sales and comfortably beat earnings estimates on Wednesday, thanks to lower inventories and stable revenues from video games, mitigating lower demand for toys.
  • Otis Worldwide - The elevator and escalator manufacturer beat consensus for its quarterly earnings on Wednesday, thanks to increased demand for maintenance and repair services for its equipment.
  • Mattel jumped 4% in pre-market trading after reporting a smaller-than-expected net loss for the first quarter on Tuesday evening. The toy manufacturer also confirmed its annual profit and sales forecasts.
  • Spirit AeroSystems and Boeing have reached an agreement in which the aircraft manufacturer undertakes to pay its subcontractor an advance of $425 million so that the latter can maintain a level of production enabling Boeing to meet its orders. Boeing is also due to publish its quarterly results before the start of trading in New York.
  • Baker Hughes reported a first-quarter profit ahead of analysts' estimates on Tuesday evening, against a backdrop of rising international drilling demand. The oil services group also decided to increase the dividend paid to shareholders.
  • Meta and Ford Motors will publish their quarterly accounts after the close, while AT&T's are expected before the opening.

Analyst recommendations:

  • Airbnb, Inc.: Mizuho Securities upgrades to buy from neutral with a price target raised from USD 150 to USD 200.
  • Msci, Inc.: Deutsche Bank upgrades to buy from hold with a target price reduced from USD 613 to USD 569. Oppenheimer downgrades to market perform from outperform.
  • Philip Morris International, Inc.: SBG Securities downgrades to hold from buy with a target price of USD 105.
  • Pultegroup, Inc.: Zelman & Associates LLC upgrades to outperform from neutral with a price target raised from USD 114 to USD 126.75.
  • Sirius Xm Holdings Inc.: Pivotal Research Group upgrades to buy from hold with a price target reduced from USD 5.05 to USD 4.90. Citi downgrades to neutral from sell with a price target reduced from USD 4.10 to USD 3.30.
  • United Parcel Service Inc.: Punto Research downgrades to hold from buy with a price target raised from USD 137.77 to USD 146.
  • Rtx Corporation: Morgan Stanley maintains its market weight recommendation and raises the target price from USD 86 to USD 110.
  • Spotify Technology S.a.: Wolfe Research maintains its outperform recommendation and raises the target price from USD 270 to USD 370. Rosenblatt Securities Inc. maintains its buy recommendation and raises the target price from USD 315 to USD 396.
  • Tesla, Inc.: Punto Research maintains its buy recommendation and reduces the target price from USD 257.34 to USD 192.88.
  • Ulta Beauty, Inc.: Wells Fargo maintains its underweight recommendation and reduces the target price from USD 450 to USD 350.
  • Walt Disney Company (The): Redburn Atlantic maintains its sell recommendation and raises the target price from USD 82 to USD 100.
  • Mobico Group Plc: Peel Hunt downgrades to hold from under review with a target price of GBX 70.
  • Taylor Wimpey PL: Liberum downgrades to hold from under review with a price target reduced from GBX 140 to GBX 130.
  • Associated British Foods Plc: Kepler Cheuvreux maintains its hold recommendation with a price target raised from GBX 2150 to GBX 2750.