On September 4, 2024, Wall Street stabilized but failed to rebound from Tuesday's sharp sell-off. The Dow Jones climbed 0.1%, but the Nasdaq 100 and S&P 500 did no better than -0.2%. Investors grew concerned again about US growth after the release of two weak manufacturing statistics. Proof of this growing pessimism: investors ignored July’s solid factory orders and instead focused on the JOLTS survey, which revealed fewer job openings than expected. This spike in anxiety rekindled speculation about the Federal Reserve’s next move on September 18. According to CME's FedWatch tool, 55% of the market is betting on a 25bp rate cut in 13 days, and 45% on a 50bp cut. A week ago, the balance was 66%/34%. This means the fear of a hard economic landing is increasing. Friday’s employment figures, to be released at 8:30am US, are seen as a key indicator. If the data is close to expectations, the likelihood of a 25bp rate cut will increase. Weaker numbers could push the market back toward expecting a double rate cut, while amplifying concerns about the Fed's inability to anticipate the situation and fears of a market collapse.
 
Meanwhile, in Europe, the mood was much darker. The Bel20 gained 0.5%, driven by strong performances from Lotus Bakeries, Anheuser-Busch InBev, and UCB. Both Lotus and UCB have seen extraordinary stock market trajectories, with Lotus now the most valuable cookie producer and UCB standing out as the best-performing mid-sized pharmaceutical stock. In contrast, the CAC40 continued its decline for the third consecutive session, losing around 1%. France’s luxury goods sector dragged the index down, with companies like LVMH and Hermès falling 4%, following a lukewarm sector note from Morgan Stanley. The firm maintained a buy rating on LVMH but lowered its target price from EUR 760 to EUR 715, citing concerns over both China and the US — the two largest markets for luxury goods. China’s slowing economy and reduced discretionary spending are hitting luxury demand hard, while concerns about US growth are also hurting the sector.
 
In the Asia-Pacific region, caution reigned. Tokyo remained down 1%, while China’s markets hovered around zero, with the CSI300 flat and the Hang Seng down 0.6%. South Korea failed to bounce back, but Taiwan recovered slightly. Australia, which dropped 2% the previous day, managed to recover by 0.3%. European leading indicators pointed to a bearish opening for the day.
 
Today's focus will be on a double dose of US employment data (weekly numbers and the ADP report) as well as a double serving of US services sector activity indicators (PMI and ISM). These four reports will provide more clarity on whether the US economy is on the verge of collapse or displaying heroic resilience. Either way, the markets are poised for a reaction.

Economic highlights of the day:

There are series of important economic data: Challenger layoffs at (7:30am), ADP employment change at (8:15am), new jobless claims, non-farm productivity and unit labor costs, all at (8:30am). The S&P Global composite and services PMIs will follow at (9:45am), the ISM services index at (10:00am) and finally, crude inventories according to the Department of Energy at (11:00am). Full agenda here.

The dollar is down to EUR 0.9019 and GBP 0.7599. The ounce of gold is trading at USD 2511. Oil is holding steady, with North Sea Brent at USD 73.69 a barrel and US light crude WTI at USD 69.69. The yield on 10-year US debt is at 3.76%. Bitcoin is trading at USD 57,250.

In corporate news:

  • Alphabet – An EU Court of Justice adviser agreed Thursday with the Italian competition authority that Google, a subsidiary of Alphabet, may have violated competition rules by refusing access to its Android Auto platform for an electric mobility app developed by Enel. The court’s judges are expected to rule in the coming months and generally follow advisers' opinions.
  • C3.AI – The company, which develops enterprise AI software, is down 20% pre-market after its subscription revenue was squeezed by slow pilot customer conversions.
  • Coca-Cola – CFRA downgraded its rating from "buy" to "hold."
  • Dollar Tree – JP Morgan downgraded its rating from "overweight" to "neutral."
  • Frontier Communications – Verizon announced Thursday that it would acquire Frontier Communications in an all-cash deal worth $20 billion, or $38.50 per share. Frontier Communications fell 8.6% to $35.5 pre-market, while Verizon gained 1%.
  • General Motors – The company announced Wednesday that it will begin producing its first-ever hybrid-flex vehicles in Brazil, capable of running on 100% ethanol or gasoline, in addition to their batteries.
  • Hewlett Packard Enterprise – The company raised its annual profit forecast on Wednesday, with demand for AI-related servers accelerating due to increasing corporate investments in infrastructure.
  • Honeywell – Chief Financial Officer Greg Lewis will step down and be replaced by Mike Stepniak, the company announced Thursday.
  • Johnson & Johnson – The company is expected to pay an additional $1.1 billion to settle tens of thousands of lawsuits alleging its baby powder and other talc-based products caused cancer, according to sources close to the matter.
  • KB Home – RBC downgraded its rating from "sector perform" to "underperform."
  • Robinhood Markets – The company’s crypto platform will pay $3.9 million to settle allegations that it did not allow customers to withdraw cryptocurrencies from their accounts between 2018 and 2022, according to California Attorney General Rob Bonta.
  • Tesla – The company takes 2.5% in pre-market trading after announcing the launch of its fully autonomous driving software (FSD) in Europe and China in Q1 2025, pending regulatory approval. The company is also expected to unveil a robotaxi on October 10.
  • Verizon – The company announced Thursday that it would acquire Frontier Communications in an all-cash deal worth $20 billion, or $38.50 per share. Frontier Communications fell 8.6% to $35.5 pre-market, while Verizon gained 1%.

Analyst recommendations:

  • Antofagasta: Goldman Sachs initiates a neutral recommendation with a target price of GBX 2000.
  • Barclays: BNP Paribas Exane maintains its neutral recommendation with a price target raised from GBX 260 to GBX 265.
  • Barratt Developments: Stifel maintains its hold recommendation with a price target raised from GBX 460 to GBX 525.
  • Booking Holdings: Morgan Stanley maintains its market weight recommendation and raises the target price from USD 4000 to USD 4200.
  • Celsius Holdings: B Riley Securities maintains its buy recommendation and reduces the target price from USD 73 to USD 50.
  • Copart: BNP Paribas Exane maintains its outperform recommendation and reduces the target price from USD 65 to USD 61.
  • Dick's Sporting Goods: Goldman Sachs maintains its buy recommendation and raises the target price from USD 251 to USD 261.
  • Dollar Tree: BNP Paribas Exane maintains its outperform recommendation and reduces the target price from USD 140 to USD 84.
  • Frontier Communications Parent: Raymond James maintains its strong buy recommendation and raises the target price from USD 37 to USD 44.
  • Hess Corporation: Citigroup remains neutral recommendation with a price target reduced from USD 160 to USD 145.
  • Humana: RBC Capital maintains its outperform rating and raises the target price from USD 385 to USD 400.
  • Light & Wonder: Redburn Atlantic maintains a neutral recommendation with a price target raised from USD 110 to USD 115.
  • Lloyds Banking Group: BNP Paribas Exane maintains its outperform recommendation with a price target raised from GBX 73 to GBX 74.
  • Marathon Oil Corporation: Citigroup remains neutral recommendation with a price target reduced from USD 29 to USD 28.
  • Old Dominion Freight Line: BMO Capital Markets maintains its outperform rating and reduces the target price from USD 215 to USD 214.
  • Planet Fitness: BNP Paribas Exane upgrades to outperform from neutral with a price target raised from USD 73 to USD 97.
  • Saia: BMO Capital Markets maintains its market perform recommendation with a price target reduced from USD 480 to USD 465.
  • Whitbread: Redburn Atlantic downgrades to neutral from sell with a target price of GBX 2750.
  • Wise: Autonomous Research maintains its neutral recommendation and reduces the target price from GBP 8.30 to GBP 7.40.
  • Xpo: BMO Capital Markets maintains its outperform rating and reduces the target price from USD 145 to USD 140.