The resilience of the American economy is truly astounding. Despite several rate hikes, it grew by 4.9% in the third quarter, while 4.5% was expected. It marks a sharp acceleration compared to growth of about 2% for the previous four quarters. This was supported mainly by the American consumer, who continues to spend like there’s no tomorrow.

What this means for the Fed’s monetary policy is what many investors are wondering. And the answer is that it probably won’t change anything, since this acceleration was widely expected, and because a surge in U.S. Treasury yields and stock market selloff have tightened financial conditions. Markets didn’t react much after the announcement, with futures on all three Wall Street indices slightly in the red bar the Dow Jones, hovering around 0.

It seems that a “soft landing” is possible for the economy, due to a moderate unit labor costs growth in the second quarter and a resilient job market.

Meanwhile, the ECB decision released its monetary policy decision this morning. All the economists surveyed by the financial agencies - 85 at Reuters and 59 at Bloomberg - agreed that the European central bank would leave its rates unchanged, and they were right. All three key rates are still, notably the refi rate at 4.5%. There was no real suspense: the surveys on purchasing managers' morale are so weak that it would be suicidal to turn the screws again, especially if inflation continues to fall faster than the specialists expected.

Thursday's session will also marked by a new wave of quarterly corporate results, including Comcast Corporation, Bristol-Myers Squibb Company, Boston Scientific Corporation, Merck & Co, United Parcel Service and MasterCard. Last night, after the Wall Street close, Meta Platforms fell by over 3% and IBM rose slightly on the announcement of their respective performances. Earlier in the US, the Nasdaq 100 had sunk -2.5%, dragged down by Alphabet's 9.5% plunge, which was not countered by Microsoft's 3% rise. The market is wondering whether Alphabet is losing the AI battle to Microsoft. Of course, it's too early to draw any conclusions, but the 12.5% gulf that opened up between the two stocks yesterday speaks volumes about investors' fears. The Dow Jones, meanwhile, lost just 0.3%, protected by the absence of an oversized technology pocket in its midst. Yesterday, Meta produced some rather cautious comments on year-end and 2024 growth.

In other news, the US House of Representatives finally has a new speaker, in the person of Mike Johnson, a 51-year-old ultraconservative Republican elected official close to Donald Trump. The man is little known, so much so that several American newspapers have ironized that many had to go through web search engines to discover the character. In the Middle East, Israel is "preparing a ground invasion" of Gaza.

Economic highlights of the day:

The ECB’s monetary policy decision, US weekly jobless claims, wholesale inventories, durable goods orders and Q3 GDP are on the agenda. 

The dollar is trading at EUR 0.9478 and GBP 0.8254. The ounce of gold is down to USD 1979. Oil isalso down, with North Sea Brent at USD 87.13 a barrel and US light crude WTI at USD 83.26. The yield on 10-year US debt has risen to 4.96%, then fell to 4.90%. Bitcoin is trading at USD 34,100.

In corporate news:

  • Meta Platforms reported higher-than-expected sales for the July-September period on Wednesday, but warned of accelerating expenses next year and additional regulatory pressures. The group reported quarterly sales up 23% to $34.15 billion, against a consensus of $33.56 billion according to LSEG data. The stock lost 4.1% before the opening.
  • IBM reported third-quarter sales slightly ahead of Wall Street expectations on Wednesday, supported by stable demand for its software solutions and stronger-than-expected activity in the computer sector. IBM's third-quarter sales rose by around 5% to $14.8 billion, against a consensus of $14.73 billion.
  • UPS lowered its sales and adjusted operating margin forecasts for 2023 on Thursday, due to a drop in demand for package deliveries from e-commerce and as the group tries to regain customer confidence after tumultuous union negotiations. The share price fell by more than 5% in pre-market trading.
  • Morgan Stanley appointed Ted Pick as its new CEO on Wednesday. The stock had little reaction in pre-market trading, although analysts at JPMorgan considered the news positive, believing it likely to take some weight off the stock.
  • Mattel warned on Wednesday of a slowdown in demand in the toy sector. The stock fell by around 8% after the close, after the toymaker reiterated that its annual net sales forecasts would be "comparable" to last year's figures of $5.44 billion.
  • Hasbro - The manufacturer of games, including the famous Monopoly, has sharply lowered its annual sales forecast against the backdrop of slowing demand in the sector. It now expects a decline of 13% to 15%, compared with the 3% to 6% previously expected. The share price fell by 11% in pre-market trading.
  • Merck reported better-than-expected third-quarter sales and earnings on Thursday, boosted by surprisingly robust demand for its COVID-19 treatment, particularly in Japan. The share gained 1.3% in pre-market trading.
  • Whirlpool moderated its full-year earnings forecasts on Wednesday, citing a drop in demand for its washing machines and kitchen appliances amid the crisis in purchasing power. The company now expects earnings per share of around $16, compared with a previous forecast of $16 to $18.
  • Teradyne reported better-than-expected third-quarter sales on Wednesday, thanks to sustained demand for the company's chip testing tools. Teradyne's third-quarter net sales fell by around 15% to $703.7 million from $827.1 million a year ago, but beat consensus of $684.6 million.
  • Ford Motor - Production at one of the automaker's plants in Canada could grind to a halt by next Wednesday if no agreement is reached to the ongoing strike in Kentucky, a Canadian union representative told Reuters. Ford and negotiators from the United Auto Workers (UAW) union have, however, reached an agreement that still needs to be approved by the union's leadership, CNBC reported on Wednesday.
  • Marathon Petroleum - The US refiner announced a new $5 billion share buyback plan on Wednesday, and also raised its quarterly dividend by 10%.
  • The Federal Reserve proposed on Wednesday to cut by nearly a third the amount of "swipe fees" that banks can charge merchants for processing debit card transactions.
  • Southwest Airlines said Wednesday it had reached a tentative agreement with Transport Workers Union Local 556, which represents nearly 19,000 flight attendants.
  • United Rentals - The equipment rental company beat consensus in the third quarter on Wednesday, thanks to strong demand for industrial tools. The company reported adjusted earnings of $11.73 per share, beating analysts' average estimate of $11.2 per share.
  • Globe Life reported a nearly 24% jump in third-quarter earnings on Wednesday, helped by higher insurance underwriting and investment income. Net operating income was $2.71 per diluted share in the three months to September 30, compared with $2.19 last year.
  • Align Technology fell by 25.1% before the opening, with the company now forecasting sales for fiscal 2023 of between $3.83 and $3.85 billion, compared with a previous forecast of $3.97 to $3.99 billion.
  • EQT - The natural gas producer reported a surprise profit on Wednesday, helped by higher sales volumes that offset lower gas prices. The company reported adjusted earnings of 30 cents per share for the quarter, against a consensus loss of 8 cents per share, according to LSEG data.

Analyst recommendations:

  • Adobe inc: Oppenheimer upgrades to outperform from market perform with a target price of USD 660.
  • Albemarle corp: Baird maintains its outperform rating and reduces the target price from USD 288 to USD 210.
  • Align Technology: Jefferies maintains its buy recommendation and reduces the target price from USD 400 to USD 305.
  • Anglo amer: Bernstein maintains its market perform recommendation with a price target reduced from GBX 2660 to GBX 2640.
  • Applied material: Morningstar downgrades to hold from sell with a price target raised from USD 110 to USD 152.
  • Automatic data: Baird maintains its neutral recommendation and reduces the target price from USD 270 to USD 265.
  • B&m european: Barclays maintains its overweight recommendation with a price target raised from GBP 6.20 to GBP 6.30.
  • Broadcom inc: Haitong International Research Ltd downgrades to neutral from outperform with a price target reduced from USD 978 to USD 879.
  • Canadian pacific: JP Morgan maintains its overweight recommendation with a target price reduced from CAD 122 to CAD 121.
  • Coca-cola: Daiwa Securities maintains its outperform recommendation with a price target reduced from USD 68 to USD 59.
  • Edwards life: Bernstein maintains its underperform recommendation and reduces the target price from USD 75 to USD 63.
  • Equinix: BNP Paribas Exane maintains its outperform recommendation and reduces the target price from USD 938 to USD 855.
  • Estee lauder: Jefferies maintains its hold recommendation and reduces the target price from USD 190 to USD 125.
  • Fortive corp: Citi maintains its buy recommendation with a price target reduced from USD 90 to USD 85.
  • General dynamics: Baird maintains its outperform rating and raises the target price from USD 275 to USD 302.
  • Hikma pharmaceut: Peel Hunt maintains its buy recommendation and reduces the target price from GBX 2480 to GBX 2340.
  • Hilton worldwide: Macquarie maintains its neutral recommendation with a price target raised from USD 155 to USD 160.
  • Hologic: Needham maintains its buy recommendation and reduces the target price from USD 95 to USD 83.
  • Howmet aerospace: William O'Neil & Co Incorporated drops coverage.
  • Kinder morgan: Baptista Research upgrades to outperform from hold with a price target reduced from USD 20.80 to USD 19.80.
  • Kla corp: Morningstar upgrades to hold from sell with a price target raised from USD 410 to USD 510.
  • Lam research: Baptista Research downgrades to hold from underperform with a price target reduced from USD 750 to USD 660.90.
  • Live nation ente: Evercore ISI upgrades to outperform from in-line with a target price of USD 100.
  • Lloyds banking: Barclays maintains its overweight recommendation and reduces the target price from GBP 0.70 to GBP 0.67..
  • Meta Platforms: JP Morgan maintains its overweight recommendation with a price target raised from USD 400 to USD 420.
  • Moody's corp: Deutsche Bank maintains its hold recommendation with a price target reduced from USD 363 to USD 337.
  • On semiconductor: William O'Neil & Co Incorporated drops coverage.
  • Otis worldwi: JP Morgan maintains its neutral recommendation with a price target raised from USD 92 to USD 93.
  • Pultegroup: Raymond James maintains its outperform rating with a price target reduced from USD 105 to USD 100.
  • Rtx: Baptista Research upgrades to buy from hold with a price target raised from USD 105.40 to USD 107.40.
  • Servicenow: Morningstar upgrades to buy from hold with a price target raised from USD 625 to USD 640.
  • Snap inc: China Renaissance Research downgrades to hold from sell with a price target raised from USD 7 to USD 9.
  • Standard charter: Goldman Sachs maintains its neutral recommendation with a price target reduced from GBX 920 to GBX 879.
  • Steris plc: Piper Sandler & Co maintains its neutral recommendation with a price target reduced from USD 220 to USD 215.
  • Teledyne tech: BNP Paribas Exane maintains its outperform rating with a price target reduced from USD 530 to USD 500.
  • Thermo fisher: KeyBanc Capital Markets downgrades to sector weight from overweight.
  • Vici properties: BNP Paribas Exane maintains its outperform recommendation with a price target reduced from USD 41 to USD 34.
  • Visa: Fubon Securities maintains its buy recommendation with a price target raised from USD 272 to USD 278.
  • Waste management: Raymond James maintains its outperform rating and reduces the target price from USD 179 to USD 175.
  • Wpp plc: Goldman Sachs maintains its neutral recommendation with a price target reduced from GBX 885 to GBX 865.