Certain dates in the calendar are rich in events. This is clearly the case for March 15, which is the day of Julius Caesar's assassination, Christopher Columbus' return to Europe after the "discovery" of America, the registration of the first .com domain name and Mikhail Gorbachev's first term as president of the Soviet Union.

Because yesterday, the US technology sector suffered its fourth fall in five sessions, as investors suddenly remember that there are other things than AI and that rate cuts and the Fed are also important. Higher-than-expected inflation data could mean that these cuts might not happen as early as June. Until now, investors didn't seem to care, hypnotized by AI, strong indices and higher corporate earnings. The worry is that if the rate cut scenario is called into question, the improvement in corporate earnings component is likely to be revised downwards. Today, the market is losing some hope that the Fed will cut rates by a quarter-point at the end of its June 11-12 meeting. The probability provided by the options market has fallen to 54%, compared with 73% a week ago and 82% a month ago. In the meantime, inflation seems to have stopped moving towards the central bank's 2% target.

Markets have just revised their rate cuts forecast for 2023, and are getting closer to the scenario provided by the Fed, since they are now pricing only three 0.25 percentage point cuts in the US this year. At the start of the year, investors were still hoping for six rate cuts! This new scenario caused futures to drop and Wall Street to open well in the red.

As is often the case, the bond market is giving a more pragmatic reading: the yield on 10-year US debt climbed to 4.29% yesterday, its highest level for two weeks, whereas it was close to breaking the 4% barrier a few days ago. This highlights that investors have raised their guard a little with regard to the evolution of interest rates. This is borne out by the fall in technology stocks and the retreat of other speculative assets, such as bitcoin. There will undoubtedly be some volatility ahead of next week's Fed meeting (March 19-20). In all likelihood, the Fed will leave rates unchanged, but all eyes will be on its comments and the famous "dot plot". This indicator records the opinions of the 18 members of the central bank's Monetary Policy Committee in response to the question "at what level will key rates be at the end of this year, at the end of next year, at the end of the following year and in the medium term". It gives an idea of general sentiment at the time of the meeting, but also allows us to see what has changed since the previous dot-plot. For example, whether central bankers are more tense or more serene. If they've changed their minds. If they see rates staying high for longer or shorter, etc.

Technology stocks are therefore under a little pressure after four months of rapid rise. Investors are still looking for the future Amazon, Alphabet and Meta of artificial intelligence. In particular, they're buying Nvidia because they've more or less figured out what the group is capable of achieving in terms of profits with these technologies, and Microsoft, because Microsoft always wins, and has overtaken the other digital platforms in the AI race. On the other hand, they still have trouble identifying winners and losers, especially in the software sphere. The Adobe case is unlikely to shed much light on this point. On the face of it, the group, with its near-monopoly position in certain areas of creative software, is at the heart of creative AI. However, the results published last night show that there is still a grey area between making AI tools available (in this case, contained in Adobe's Creative Cloud offering) and making money with the AI tools made available. The stock lost 11% yesterday after the close. An insider wrote this morning that the figures published "raise concerns about the health of Creative Cloud and the pace of monetization of AI".

In the current market configuration, we mustn't let disappointments pile up on AI, otherwise one of the pillars of the market's rise would be weakened. Even so, it would be quite logical for a phase of disappointment to follow the period of excitement surrounding this technology. After all, that's what usually happens. Unless the industry manages to keep the market on its toes with a well-orchestrated narrative. Perhaps a mission for generative AI?

In Asia-Pacific, red dominates in the wake of Wall Street's continued decline, and weekly performances look negative. Overnight, as expected, the People's Bank of China maintained its one-year lending rate at 2.5%. On the other hand, it withdrew liquidity from the banking system for the first time since November 2022. Leading indicators are mostly in the green in Europe, but are losing ground. To finish this column, let's remember that today is Witching Day, when the contracts simultaneously expire, which usually causes some volatility.

Economic highlights of the day:

On the agenda today, the USA for Empire Manufacturing, capacity utilization and GM industrial production, as well as University of Michigan sentiment.

The dollar is worth EUR 0.9185 and GBP 0.7844. The ounce of gold stabilizes at around USD 2,160. Oil is on the rebound, with North Sea Brent at USD 85.02 a barrel and US light crude WTI at USD 80.97. The yield on 10-year US debt rises to 4.28%. Bitcoin falls to USD 67,830.

In corporate news:

  • Adobe plunged 11.4% in pre-market trading on Thursday evening, when the Photoshop publisher forecast sales for the current quarter of between $5.25 billion and $5.30 billion, against a consensus of $5.31 billion. The group's quarterly forecasts also raised fears of strong competition and disappointed investors hoping for a boost from the integration of generative AI.
  • Tesla rebounds by 1% in pre-market trading on Friday, after two consecutive sessions down by more than 4%.
  • McDonald’s said Friday that a technology failure had disrupted operations at many of its locations worldwide, including Japan and Australia, but ruled out the possibility of a cybersecurity incident.
  • Merck said on Friday that its blockbuster immunotherapy Keytruda, combined with chemoradiotherapy, had met the primary endpoint of a late-stage study and was improving survival in patients newly diagnosed with a form of cervical cancer.
  • Alphabet, Meta - Advertisers prepare contingency plans with TikTok's rivals in case the app is sold or banned in the US. Short video-sharing platforms Meta and YouTube, TikTok's biggest competitors, stand to benefit from increased advertising budgets if the app is banned, according to advertising experts.
  • Ulta Beauty lost 6.6% in pre-market trading after announcing on Thursday evening that it expected to post a lower-than-expected annual profit due to higher supply chain costs and increased promotions.
  • Madrigal Pharmaceuticals soared 25.4% in premarket trading after the US Food and Drug Administration approved its treatment for hepatic steatosis, a pathology manifested by excess fat in the liver unrelated to alcohol consumption.
  • US Steel lost 0.7% in pre-market trading, as US President Joe Biden said on Thursday evening that the group should remain a US-owned company, despite having reached an agreement with Nippon Steel to sell it for $14.9 billion.

Analyst recommendations:

  • Abbvie Inc.: Baptista Research downgrades to hold from outperform with a price target raised from USD 164.30 to USD 191.10.
  • American Express Company: Autonomous Research downgrades to neutral from outperform with a price target reduced from USD 224 to USD 220.
  • Blackrock, Inc.: Baptista Research downgrades to hold from outperform with a price target raised from USD 801.90 to USD 900.90.
  • Dollar General Corporation: Telsey Advisory Group upgrades to outperform from market perform with a price target raised from USD 155 to USD 170.
  • Republic Services, Inc.: Morgan Stanley downgrades to equal weight from overweight with a target price of USD 199.
  • Snowflake Inc.: Guggenheim downgrades to neutral from sell.
  • Zoetis Inc.: William O'Neil & Co Incorporated drops coverage on the stock.
  • Chevron Corporation: Baptista Research upgrades to outperform from buy with a price target reduced from USD 188.60 to USD 178.20.
  • Coinbase Global, Inc.: JP Morgan maintains a neutral recommendation with a price target raised from USD 95 to USD 150.
  • Micron Technology, Inc.: Citigroup maintains its buy recommendation and raises the target price from USD 95 to USD 150.
  • Ulta Beauty, Inc.: Redburn Atlantic maintains a neutral recommendation with a price target raised from USD 425 to USD 535.
  • United Airlines Holdings, Inc.: BNP Paribas Exane maintains its outperform recommendation and raises the target price from USD 66 to USD 80.
  • Astrazeneca Plc: Baptista Research downgrades to hold from outperform with a price target reduced from USD 78.20 to USD 77.40.
  • Bridgepoint Group Plc: Peel Hunt upgrades to add from buy with a price target raised from GBX 250 to GBX 280.
  • British Land Company Plc: Shore Capital upgrades to buy from hold.
  • Currys Plc: AlphaValue/Baader Europe upgrades to buy from add with a price target reduced from GBX 79.20 to GBX 79.10.
  • Cvs Group Plc: RBC Capital downgrades to sector perform from outperform with a price target reduced from GBX 2100 to GBX 1200.
  • Deliveroo Plc: HSBC upgrades to buy from hold with a price target raised from GBP 1.30 to GBP 1.50.
  • Derwent London Plc: Shore Capital upgrades to buy from hold. Berenberg upgrades to buy from hold with a price target reduced from GBX 2512 to GBX 2494.
  • International Consolidated Airlines Group, S.a.: BNP Paribas Exane upgrades to outperform from underperform with a price target raised from GBX 140 to GBX 210. Kepler Cheuvreux upgrades to buy from reduce with a price target raised from EUR 1.50 to EUR 2.60.
  • Intertek Group Plc: Shore Capital downgrades to sell from hold with a target price of GBX 4200.
  • Volution Group Plc: Liberum upgrades to buy from under review with a price target raised from GBX 470 to GBX 510.
  • Wizz Air Holdings Plc: BNP Paribas Exane downgrades to underperform from neutral with a target price of GBX 2200.
  • Align Technology, Inc.: Baptista Research downgrades to underperform from buy with a price target reduced from USD 336 to USD 321.80.