On Tuesday, Wall Street closed well in the green: +1.15% for the S&P500 and +1.75% for the Nasdaq 100. This good performance comes after the publication of a set of good economic data. Durable goods orders showed new orders for US manufactured durable goods rose 1.7% month-over-month in May 2023, against expectations of a 1% decline. This follows a 1.2% rise in April. This is a good sign for the economy and shows that recession is not imminent.

But the biggest surprise was US consumer spending. The Conference Board's consumer confidence index rose from 102.5 to 109.7 points between May and June. It means U.S. consumer confidence is not only building up, but also at a much higher pace than expected since the consensus was for 103.9 points. This is a welcome development, as the ability of US consumers to absorb the inflationary shock without capitulating is an important determinant of economic momentum. The forward-looking component also rose to 79 points (versus 71 last month). This is still low, but the survey shows that, overall, more American households expect inflation to fall in the months ahead.

Nevertheless, investors still adopt cautious approach as they await the next stakes, which are expected at the end of the week with the US inflation data. Futures on the main three Wall Street indices were slightly in the red in premarket trading.

Today, the focus will be on the many speeches at the European Central Bank's panel discussion in Portugal, where Bank of England Governor Andrew Bailey will be taking with ECB President Christine Lagarde, Fed chair Jerome Powell and Bank of Japan Governor Kazuo Ueda.

On a side note, Australia reported lower-than-expected inflation overnight. It eased to 5.6% year-on-year, compared with 6.8% last month.

 

Economic highlights of the day:

In the United States, the trade balance and wholesale inventories are on the agenda, as well as the traditional oil inventories. The full agenda is here. 

The dollar/euro pair remains close to EUR 0.9151. The ounce of gold gives up some ground at USD 1906. Oil too, with North Sea Brent at USD 72.17 a barrel and US light crude WTI at USD 67.46. The yield on 10-year US debt climbed to around 3.76%. Bitcoin is still trading above USD 30,000.

 

In corporate news:

  • Tesla sales in China could reach a new record of 155,000 units in the April-June period, despite a decline in market share as local competitors such as BYD and Aion gain strength, according to analysts.
  • Pfizer and Opko Health announced that the U.S. Food and Drug Administration (FDA) had approved their treatment for growth disorders caused by insufficient secretion of growth hormone in children.
  • General Mills expects full-year earnings well below market expectations, as the food group faces a slowdown in demand due to higher prices. It lost 4% in pre-market trading.
  • Jefferies Financial reported a quarterly profit above expectations on Tuesday, as a strong performance by the investment bank's capital markets business offset lower trading volumes.
  • Harley-Davidson appointed Jonathan Root as CFO to succeed Gina Goetter, who resigned in April.
  • Lordstown Motors is expected to widen its losses after filing for bankruptcy on Tuesday and putting itself up for sale. The electric pick-up manufacturer lost nearly 12% in pre-market trading after hitting an all-time low of $1.13 the previous day.
  • On Tuesday, the U.S. justice system approved Overstock.com purchase of Bed Bath & Beyond's brand, intellectual property and e-commerce platform for $21.5 million.

Analyst recommendations:

  • American States Water: Wells Fargo Securities downgrades to underweight from equal-weight. PT up 3.3% to $89.
  • Bristol-Myers: Daiwa Securities initiated coverage with a recommendation of outperform. PT set to $70.
  • California Water: Wells Fargo Securities upgrades to equal-weight from underweight. PT up 9.7% to $56.
  • Coherent Corp:B Riley Securities downgrades to neutral from buy. PT down 2.3% to $47.
  • Easyjet: RBC downgrades from buy to neutral but maintains its target at GBp 540.
  • Eli Lilly and Company: Barclays remains Buy and raises its target from USD 420 to USD 500.
  • Delta Air Lines: Jefferies remains Buy and raises its target from 45 to 50 USD.
  • International Consolidated Airlines Group: RBC reinstated its coverage with a sector performance recommendation and a target of GBp 1,800.
  • Lincoln Electric: KeyBanc Capital Markets upgrades to overweight from sector weight. PT up 20% to $232.
  • Regeneron: Canaccord Genuity downgrades to hold from buy. PT set to $720, implies a 0.5% increase from last price.
  • Sage Group: JP Morgan upgrades from neutral to overweight with a target of GBp 1100.
  • Walgreens Boots: Deutsche Bank downgrades to hold from buy. PT up 19% to $34.
  • Wizz Air Holdings: RBC reinstates its coverage with an Outperform recommendation and a target of GBp 3900.