Before the Bell: From 99% to 99.9% certainty—quite a leap?

Not technology, but commodities, healthcare, and luxury goods were in demand. Today’s focus: U.S. consumer confidence.

Good news: U.S. inflation in August came in at 2.9%, or 3.1% excluding fresh food and energy. Exactly as expected—and Wall Street celebrated with its strongest gain of the week. Investors were already 99% sure the Fed would cut rates next week, and now the odds are 99.9%. Does that justify such a rally? Clearly, euphoria is in the air. Interestingly, it wasn’t AI technology driving markets this time, but commodities (+2%), healthcare (+1.9%), and luxury goods (+1.9%). Instead of Nvidia (-0.08%), it was Johnson & Johnson (+1.5%), Caterpillar (+2%), and Apple (+1.5%) that gained ground. Micron Technology surged 7.8% after a higher price target. Investors remain eager buyers. In Europe, Stellantis (+9.1%) stood out after upbeat comments from its CEO. Another unusual climber was German chemicals group Covestro (+6.1%), a stock that has bounced back from deep lows. Value stocks had a good day overall. EVS announced the acquisition of a second robotics company.

Tokyo gained 1% this morning, while Hong Kong rose another 1.3%. The Hang Seng Index is now up 32% since the start of the year. Alibaba (+5.8%) and Baidu (+8.9%) continued to climb. While inflation data grabbed headlines yesterday, today’s U.S. consumer confidence figures may be just as important—the University of Michigan publishes its survey later. In Brussels, Immobel reported another profit this morning.

Subscriptions keep climbing

Adobe, the software giant best known for Photoshop and the PDF format, released its latest quarterly results after Wall Street’s close. Revenue rose 11% to just under 6 billion dollar, while net profit increased 5% to 1.77 billion dollar. Subscription revenue climbed a strong 14%. The company also raised its full-year outlook. Shares rose 3% in after-hours trading. Adobe was once a top favorite among investors, but fears that AI could disrupt its core business have pulled its valuation down to 22 times trailing earnings—still lofty, but well off its peaks. Adobe’s main clientele, however, are professional graphic designers, who may be harder to replace with AI than many assume.

Weight-loss drugs eat into food sales

Kroger, the major U.S. supermarket chain, reported second-quarter results slightly above expectations on both revenue and earnings. Comparable sales rose 3.4%, compared to forecasts of 2.8%. Kroger nudged its full-year sales forecast higher to a range of 2.7%–3.4%. Initially, the stock rose more than 1.5%, but gains faded to just 0.3% by the close. The stronger results were driven largely by sales of GLP-1 weight-loss drugs in its pharmacy segment and solid e-commerce growth. But while consumers are snapping up diet products, they are cutting back on food and snacks. Analysts noted little growth in core grocery sales, amid stiff competition from discounters and warehouse clubs. Kroger also reported that consumer confidence remains weak.

Did you know…

that U.S. jobless claims rose to 263,000 in the first week of September? That’s the highest level since October 2021.

This article was translated from Dutch and was originally published on Spaarvarkens.be.