Truist Financial's shares, in particular, jumped nearly 6% following impressive Q4 adjusted earnings and revenue. In tech land, Nvidia and Broadcom enjoyed gains after Barclays sweetened their price targets. But the market's gaze is fixed on the impending inauguration of President-elect Donald Trump, with investors eagerly anticipating policy shifts concerning tax cuts, tariffs, and regulations. However, there's a lingering unease about potential trade wars and inflationary pressures. Nvidia's CEO, opting out of Trump's inauguration, added a dash of drama.

Yesterday on Wall Street, the party sparked by lower-than-expected inflation came to a screeching halt. Technology stocks took a dive, with the Nasdaq closing down 0.7% and the S&P 500 slipping 0.21%. However, utilities and real estate sectors bounced back robustly on renewed hopes of lower rates, as the former is highly leveraged and the latter thrives on lower rates encouraging transactions. The takeaway? Equity investors are treading carefully ahead of Trump's inauguration and his initial announcements on Monday.

On the macroeconomic stage, U.S. bond yields are easing as the week draws to a close. Fed Governor Christopher Waller, after announcing that December inflation was cooler than expected, hinted that a rate cut in the first half of 2025 isn't off the table if the price environment improves. Meanwhile, Donald Trump's Treasury Secretary nominee, Scott Bessent, delivered a reassuring Senate hearing, advocating for continued tax cuts, a strict fiscal policy, and respect for the Fed's independence. He also expressed support for ramping up sanctions against Russian oil, as rumors suggested.

Over in Japan, the yen strengthened amid growing expectations of a Bank of Japan rate hike next week. Some intriguing data emerged last night in China. Growth hit the 5% target set by the Communist Party, thanks to a robust acceleration in the fourth quarter. Whether this is due to end-of-Q3 measures or the magic of official statistics is up for debate. Economists had forecasted an average of 4.9%, so it's not too shabby, even if looming technology embargoes and upcoming customs barriers cast a shadow.

In Europe, the luxury goods sector soared, despite Chinese malls remaining ghost towns. The U.S. consumer's rekindled love for luxury is to thank. Compagnie Financière Richemont, the esteemed Swiss house, ended the day up over 16%, a remarkable feat for a company valued at roughly 87 billion euros. It reported a 10% sales increase for the last quarter of 2024, far surpassing the market's 1% expectation. This surprise comes amid sector-wide doubts and a proven lack of recovery in China, on which many companies heavily rely. Experts note Richemont's success stems from its strengthened U.S. position and strong "hard luxury" performance, mainly jewelry. Caution remains about applying this success to other players. Nonetheless, French peer LVMH rose 9%, buoyed by this second piece of good news in the sector, following Brunello Cucinelli's unexpected 11.6% Q4 sales increase. Bernard Arnault's group today even reclaimed its title as Europe's leading capitalization, taking advantage of Novo Nordisk's misfortune.

In the Asia-Pacific region, Japan dipped (-0.3%) on rate hike fears. China turned positive after GDP figures were released, but remained subdued (0.3% gains in Hong Kong and Shanghai). South Korea and Australia slipped 0.1%, while India fell 0.4%. European stock markets are in the green, with the Stoxx Europe 600 up 0.6%.

Today's economic highlights:

The economic calendar includes UK retail sales, the European consumer price index, US building permits and housing starts for December, as well as capacity utilization and US industrial production for December. The full calendar is here.

  • Dollar: EUR 0.9719  GBP 0.8210
  • Ounce of gold: USD 2706
  • Brent crude: USD 80.10 WTI: USD 77.69
  • 10-year US bond: 4.58
  • Bitcoin: USD 102,500

In corporate news :

  • Nukkleus surged 72% after regaining compliance with Nasdaq's requirements.
  • Versus Systems rose 66% following its expansion into Brazil.
  • SpaceX's Starship experienced an explosion during a flight test.
  • Target raised its sales forecast while maintaining its earnings per share guidance.
  • Microsoft now includes Copilot in Microsoft 365 for home users.
  • American Express to pay $230m to settle allegations of deceptive marketing in the US.
  • Apple disables its new AI tool for summarizing news.
  • Amazon cuts 200 jobs in its fashion and fitness division.
  • Block fined $80 million for violating banking secrecy and anti-money laundering laws.
  • Lyft wins dismissal of shareholder lawsuit over earnings report error.

Today's main earnings reports: Truist Financial, Schlumberger, Fastenal, State Street, Regions Financial, Citizens Financial Group...

Analyst recommendations:

  • Applied Materials, Inc.: KeyBanc Capital Markets upgrades to overweight from sector weight with a target price of USD 225.
  • At&T Inc.: Arete Research upgrades to neutral from sell with a price target raised from USD 13 to USD 19.
  • Cloudflare, Inc.: Citi upgrades to buy from neutral with a price target raised from USD 95 to USD 145.
  • Hubspot, Inc.: TD Cowen downgrades to hold from buy with a price target raised from USD 680 to USD 725.
  • Lam Research Corporation: KeyBanc Capital Markets upgrades to overweight from sector weight with a target price of USD 95.
  • Lumentum Holdings Inc.: Barclays upgrades to overweight from underweight with a price target raised from USD 80 to USD 125.
  • Salesforce.com, Inc.: TD Cowen upgrades to buy from hold with a target price raised from USD 380 to USD 400.
  • Teradyne Inc.: William O'Neil & Co Incorporated upgrades to buy from dropped coverage.
  • Ventas, Inc.: Baird upgrades to outperform from neutral with a price target reduced from USD 66 to USD 65.
  • Broadcom Inc.: Barclays maintains its overweight recommendation and raises the target price from USD 205 to USD 260.
  • International Paper Company: Davy maintains a neutral recommendation with a price target raised from 5600 to USD 56000.
  • Marvell Technology Group Ltd: Barclays maintains its overweight recommendation and raises the target price from USD 115 to USD 150.
  • Rli Corp.: RBC Capital maintains its sector perform recommendation and reduces the target price from 175 to USD 88.
  • Silicon Laboratories Inc.: Barclays maintains its equalweight recommendation and raises the target price from USD 75 to USD 120.
  • Twilio Inc.: TD Cowen maintains its hold recommendation and raises the target price from USD 85 to USD 120.
  • Vistra Corp.: Wolfe Research maintains its outperform recommendation and raises the target price from USD 158 to USD 193.
  • Wayfair Inc.: Evercore ISI maintains its outperform recommendation and raises the target price from 60 to USD 80.
  • TAYLOR WIMPEY PL: Peel Hunt downgrades to add from hold with a target price reduced from GBX 145 to GBX 130.
  • Wise Plc: Peel Hunt upgrades to add from buy with a price target raised from GBX 1000 to GBX 1100.