Meta Platforms jumped 10.7% in premarket trading after it forecast quarterly revenue above analysts' expectations, with Zuckerberg saying that Artificial Intelligence was boosting traffic.

So far Q1 earnings in  S&P 500 companies are down by less-than-expected at the start of the month. They fell 3.2% year-over-year, while expectations were for a 5.1% decline, according to Refinitiv data.

However, new data released at 8:30 am ET changed the mood a bit. Weekly jobless claims in the US were below expectations at 230,000, while 248,0000 were estimated, but the biggest surprise is GDP growth in the first quarter. It grew at an annual rate of 1.1%, while 1.9% was expected. This data produces the usual effect: it fuels fears of recession, while raising hopes of a more dovish monetary policy from the Fed.  

Economists expected the U.S. economy to have continued to grow at a solid pace thanks to strong consumer spending, but it seems that the effects of higher interest rates are having a bigger impact that initially thought.

In any case, the data didn’t affect indices much. However, the Fed rate hike bets for next week went from 73% to about 80% on CME’s FedWatch tool.

In other news, the U.S. House of Representatives narrowly passed a bill to raise the government's $31.4 trillion debt ceiling. However, it is expected to get more resistance in the Senate.

But let’s go back to yesterday. It was more grueling than expected. Not only were the corporate earnings releases mixed, but a fire broke out in the data center that hosts MarketScreener's servers at night. The fire was contained but the network was only restored late in the morning, once the safety checks had been carried out. The server rooms also had to be cooled. Our equipment fortunately escaped the flames. As a result, access to our sites was hard, or even impossible yesterday for half the day. And no access to some of our back-office tools either.

Returning to equity markets, the week is coming with hundreds of quarterly company results. As mentioned earlier, a bright spot came from the big US technology stocks, which allowed the Nasdaq to shine. Strong numbers from Microsoft and Alphabet ensured a 0.6% gain for the Nasdaq 100 yesterday, while the S&P500 was down 0.4%, plagued by its financials and energy stocks. Meta Platforms confirmed the good health of big tech, but this was enough to cheer up investors who are once again worried about bank failures as First Republic lost another 30% yesterday.

 

Economic highlights of the day:

The first estimate of US GDP for Q1 2023 and the weekly unemployment figures are today’s main indicators. The full agenda is here. 

The dollar is slightly up against the euro and the pound to EUR 0.9080 and GBP 0.8034. The ounce of gold is stable at 1991 dollars. Oil is down, with North Sea Brent at USD 77.89 a barrel and US WTI light crude at USD 74.55. The yield on US 10-year debt is 3.44%. Bitcoin is trading at USD 28,800.

 

In corporate news:

  • Boeing said Wednesday it plans to increase production of its 737 MAX aircraft to 38 a month by the end of the year, while maintaining its annual cash flow target, as it tries to reassure investors about its delivery schedule. The stock was up 1.4 percent in premarket trading.
  • Microsoft on Tuesday reported January-March revenue that beat Wall Street expectations, led by growth in its cloud computing business and sales of its Office suite. The stock jumped 8.3% in pre-market trading.
  • Alphabet reported better-than-expected quarterly revenue on Tuesday, thanks to a rebound in advertising revenue and continued strong demand for its cloud services, and announced a $70 billion share buyback program. The stock was up about 4% in after-hours trading.
  • Alibaba - The cloud computing division of China's e-commerce and technology giant will cut prices on its products and services by 15 percent to nearly 50 percent starting Wednesday, as competition in the industry intensifies.
  • First Republic Bank was still under pressure Wednesday, down more than 15 percent in premarket trading, after reporting earlier this week more than $100 billion in first-quarter deposit outflows.
  • Visa reported better-than-expected quarterly profit on Tuesday and said it expects continued growth in its payments business as the expected recession is likely to be milder than expected.
  • Texas Instruments said Tuesday it expects second-quarter revenue and profit to fall short of Wall Street expectations as a slowdown in demand spreads to most of the company's markets. The stock was nevertheless up more than 1% in pre-market trading on the back of a better-than-expected first quarter.
  • Chipotle Mexican Grill on Tuesday reported better-than-expected first-quarter profit and sales on the back of higher menu prices and the opening of 41 new restaurants.
  • Hilton on Wednesday raised its annual adjusted earnings-per-share forecast on the strength of demand as tourism recovers.
  • Citigroup announced on Wednesday the appointment of Mark Woodruff as chief executive of its Australian subsidiary.
  • CME Group reported quarterly results as investors turned to the exchange operator's products to hedge against market volatility during the banking crisis in March.

 

Analyst recommendations:

  • EasyJet: J.P. Morgan upgrades from Underweight to Neutral, targeting GBp 530.
  • Electronic Arts: BMO Capital Markets downgrades to market perform from outperform. PT down 0.1% to $125.
  • Model N: RBC Capital Markets initiated coverage with a recommendation of sector perform. PT set to $35.
  • Netflix: President Capital Management upgrades to buy from neutral. PT up 22% to $393.
  • Reckitt: Berenberg research has chosen a Buy rating. The target price has been lifted and is now set at GBp 7840 compared to GBp 7575 before.
  • Safehold: J.P. Morgan reinstated coverage with a recommendation of neutral. PT set to $29 - a 5.7% increase from last price.
  • Silgan: Citi upgrades to buy from neutral. PT up 15% to $56.
  • Smith & Nephew: HSBC upgrades from buy to hold targeting GBp 1350.