In October 2024, the US private sector surprised everyone by adding 233,000 jobs, more than doubling the expected 113,000. This is the most robust job creation since July 2023, according to the ADP/Stanford Lab report. September’s figures were also revised upwards to 159,000. This strong job growth is good news for the economy, but not for investors, since it lowers the chance of further rate cuts this year. Analysts expect the unemployment rate to hold steady at 4.1%, with official employment data due on Friday.

Another report released today shows the US economy grew by 2.8% in Q3 2024, a tad below the 3% growth in Q2 and the 2.9% forecast. Personal consumption expenditures rose by 3.7%, beating expectations. Residential investment, private inventories, and net exports dragged.

Wall Street opened with a frown after the data. The S&P 500 dipped 0.1%, Dow Jones stayed flat, and Nasdaq 100 slipped 0.3%. Earnings season is in full swing. Eli Lilly‘s stock took a 12% nosedive after disappointing Q3 sales and profit, along with a cut in 2024 earnings guidance. Other companies like Mondelez, Visa, AMD, Caterpillar, Biogen, AbbVie, and Kraft Heinz also released earnings. In Europe, corporate results failed to whet investors’ appetites, especially in Switzerland, where Novartis, Clariant, Straumann, and SIG Group soured the mood. Each European market has its own underperformer: Lufthansa in Germany, BP Plc in the UK, and Wärtsilä in Finland.

This gloom contrasts with the US tech stocks’ performance, which propelled the Nasdaq 100 to uncharted territory yesterday, hitting a record high of 20,551 points. The index, a darling in recent years, enjoyed a buying spree ahead of major results. Alphabet passed its post-close test with flying colors, its stock climbing 6% after hours. Meanwhile, AMD, a minor player in artificial intelligence, was deemed too cautious in its forecasts, sending its stock down 7%. We also witnessed the usual rollercoaster from tech market wild cards, with Reddit surging 25% and Snap jumping 10% after reporting smaller-than-expected losses. Snap has yet to turn a profit since its inception, while analysts predict Reddit will break even by 2026, market gods permitting.

Across the pond, European companies with limited global exposure are struggling to hit targets. Those reliant on China are feeling the pinch even more. Moncler in luxury goods, Davide Campari in spirits, BASF in chemicals, Melexis in semiconductors, and Capgemini in consulting are all under pressure.

In Asia, rumor has it that China is mulling over raising more than 10,000 billion yuan (around $1,400 billion) in public debt to spur growth in the coming years. This figure aligns with recent whispers. Meanwhile, the surtax on Chinese electric vehicles imported into Europe kicks in today. One can only imagine LVMH, Rémy Cointreau, and their peers holding their breath, fearing Beijing’s retaliation—and their shareholders too. In the UK, it’s budget day for Rachel Reeves and the Labour Party. In the Asia-Pacific region, whispers about China’s plan haven’t stopped Hong Kong from shedding over 1.5% this morning. Japan’s market is more upbeat, enjoying a third session of notable gains. South Korea remains under pressure, with the KOSPI down 0.9% after a lackluster earnings season. Australia is down 0.8%, and India limits its decline to 0.5%. European indices are bearish, with the STOXX EUROPE 600 down 1.4%.

Today’s economic highlights:

Germany’s Q3 GDP and the first estimate of October inflation are on the agenda, while in the US, we have the ADP employment change, Q3 GDP, pending home sales and DOE crude oil inventories. The full agenda here.

The dollar is worth EUR 0.9235 and GBP 0.7713. The ounce of gold rose to USD 2,774. Oil regained some ground, with North Sea Brent at USD 71.75 a barrel and US light crude WTI at USD 68.08. The yield on 10-year US debt stands at 4.23%. Bitcoin is just over USD 72,000.

In corporate news:

• Eli Lilly‘s stock dropped 12% after disappointing Q3 results and a cut in 2024 earnings guidance.
• Brinker International‘s shares rose 6% after reporting strong fiscal Q1 results.
• Caterpillar‘s stock declined following lower Q3 earnings and revenue.
• Daqo New Energy‘s shares rose despite reporting a Q3 loss
• Bank of America‘s shares dropped 1.5% before returning to zero after announcing discussions with the Consumer Financial Protection Bureau regarding its electronic payments processing.
• Philip Morris will close two production sites in Germany.
• McDonald’s sued by consumers over E.coli outbreak.
• BlackRock is in talks to buy private equity firm HPS, according to Bloomberg.

Today’s top earnings reports: Microsoft, Meta Platforms, Eli Lilly, AbbVie, Caterpillar, Amgen, Booking, Automatic Data Processing, Starbucks, KLA Corporation, Trane, Equinix, DoorDash, Humana, Kraft Heinz, Coinbase…

Analyst recommendations:

• Align Technology, Inc.: Baptista Research upgrades to buy from hold with a price target raised from USD 253 to USD 282.20.
• Alphabet Inc.: CTBC Securities Investment Service Co LTD downgrades to neutral from buy with a target price reduced from USD 200 to USD 180.
• Amd (Advanced Micro Devices): Punto Research upgrades to hold from buy with a price target raised from USD 159.56 to USD 170.22.
• Dt Midstream, Inc.: Stifel downgrades to hold from buy and raises the target price from USD 78 to USD 89.
• Edwards Lifesciences Corporation: Daiwa Securities downgrades to neutral from outperform with a target price of USD 72.
• Graphic Packaging Holding Company: Truist Securities downgrades to hold from buy with a price target reduced from USD 32 to USD 30.
• Lear Corporation: Barclays downgrades to equalweight from overweight with a price target reduced from USD 140 to USD 120.
• Masco Corporation: RBC Capital downgrades to sector perform from outperform with a target price raised from USD 79 to USD 80.
• Nvidia Corporation: Punto Research downgrades to sell from hold with a target price of USD 126.70.
• Qorvo, Inc.: CTBC Securities Investment Service Co LTD downgrades to reduce from neutral with a price target reduced from USD 110 to USD 90.
• Selective Insurance Group, Inc.: BMO Capital Markets upgrades to outperform from market perform and raises the target price from USD 95 to USD 105.
• Allison Transmission Holdings, Inc.: Oppenheimer maintains its outperform rating and raises the target price from USD 90 to USD 115.
• Biomarin Pharmaceutical Inc.: Leerink Partners maintains its outperform rating and reduces the target price from USD 132 to USD 105.
• Boyd Gaming Corporation: Raymond James maintains its outperform rating and raises the target price from USD 67 to USD 81.
• Corning Incorporated: HSBC maintains its hold recommendation with a price target raised from 37 to USD 51.
• Crocs, Inc.: BNP Paribas Exane maintains its neutral recommendation with a price target reduced from USD 128 to USD 100.
• Doximity, Inc.: Morgan Stanley maintains its underweight recommendation and raises the target price from USD 26 to USD 33.
• E.l.f. Beauty, Inc.: Jefferies maintains its buy recommendation and reduces the target price from USD 220 to USD 175.
• Encompass Health Corporation: Deutsche Bank maintains its buy recommendation and raises the target price from USD 95 to USD 118.
• Exelixis, Inc.: Citigroup maintains its buy recommendation with a price target raised from USD 31 to USD 38.
• Leidos Holdings, Inc.: RBC Capital maintains its sector perform recommendation with a price target raised from 145 to USD 180.
• Monster Beverage Corporation: Evercore ISI maintains its outperform recommendation and reduces the target price from USD 60 to USD 30.
• Paypal Holdings, Inc.: Punto Research maintains its buy recommendation and raises the target price from USD 76 to USD 93.83.
• Qorvo, Inc.: BNP Paribas Exane downgrades to neutral from outperform with a price target reduced from USD 117 to USD 80.
• Reddit, Inc.: Goldman Sachs maintains its neutral recommendation with a price target raised from 68 to USD 105.
• Royal Caribbean Group: HSBC maintains its buy recommendation with a price target raised from 185 to USD 242.
• Tenet Healthcare Corporation: Deutsche Bank maintains its buy recommendation and raises the target price from 160 to USD 200.
• Tyler Technologies, Inc.: Baptista Research maintains its hold recommendation with a price target raised from 505 to USD 638.60.
• Admiral Group Plc: HSBC upgrades to buy from hold with a target price of GBP 33.
• Bridgepoint Group Plc: Citi downgrades to neutral from buy with a price target raised from GBP 3.20 to GBP 3.50.
• Burberry Group Plc: Bernstein upgrades to outperform from market perform with a price target raised from GBX 680 to GBX 930.
• Hunting Plc: Kepler Cheuvreux upgrades to buy from hold with a target price reduced from GBX 450 to GBX 435.
• Lloyds Banking Group Plc: Morgan Stanley downgrades to equalwt from overwt with a target price reduced from GBX 70 to GBX 65.