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Well, good afternoon, good afternoon to everyone, or good morning depending on where you're connecting from. We're going to do our first preview of the week ahead of the US opening, the first session of this new trading week, today, October 7th. The aftershocks continue, the reactions continue, and above all, the adjustments continue following Friday's data, which surprised on the upside.
The NFP figure exceeded expectations, and this US employment data, which again surpassed expectations, lowered the unemployment rate. This is also lowering expectations for the Federal Reserve's next moves. We saw this practically in real time on Friday. It clearly lowered expectations that the Fed might repeat a 50- basis-point cut.
In fact, what's being priced in right now is that the next step would be a 25- basis-point cut. There's practically a 93% probability of that happening in this case, but what's starting to be reflected is a 3%, which indicates a very small possibility right now that the Fed... They could even skip the November meeting and not cut rates afterward.
It's important to remember that at the first meeting a few weeks ago, the Fed cut rates more aggressively and preemptively, anticipating a worse slowdown in the labor market. They cut rates by 50 basis points, and we're seeing, especially in Friday's data, that perhaps it wasn't as necessary as anticipated.
In any case, we're starting to hear voices—and relevant voices within Wall Street, for example—from Ed Yardeni, an economist at Jardini Research, one of the most prominent voices on Wall Street. As we mentioned, he's already suggesting that the Fed could pause interest rate cuts for 2024. Therefore, we might not see any more rate cuts; he says it wouldn't be necessary.
Another voice that Waller-Walkeri is also closely following is that of former US Treasury Secretary Larry Summers, who says that the Fed's 50-basis-point rate cut a few weeks ago was... An error. So, it's suggesting that the Fed has anticipated this in this case, and as we were saying, Jardenia is clearly pointing to the fact that the Fed could pause the pace of rate cuts this year.
In any case, we're seeing that the market is 97% pricing in the possibility of a 25 basis point cut, and this is what's happening. As you can see, we have to raise this chart considerably. This is the 10-year US Treasury yield, which has already recovered the 4% zone, a level we hadn't seen since practically the summer.
It's recovering that movement, especially considering these lower investor expectations. In this case, given that the US Federal Reserve is no longer going to be as aggressive as I would have expected a few weeks ago, because we've seen that it has changed very quickly. In this case, all the forecasts, in fact, the bond traders, say that job growth—the figure we learned last week is the fastest in six months—therefore forces us to readjust scenarios, even pointing to a no-landing scenario.
Therefore, there is no change in the US economy; it continues to grow very strongly, as we are seeing. As analysts point out, inflation could pick up again, and the government would have little room to cut interest rates. This is what many trading desks are starting to talk about. So, bond traders are beginning to raise this potential alert in the market.
In fact, we have seen how heavyweights and well-known voices like Mike Wilson, economist at Morgan Stanley, and David Costen from Goldman Sachs, have become even more optimistic. Between the macroeconomic improvement, the better-than- expected jobs report, the government cutting interest rates, and that jobs market continuing to show strength, an economy that points to resilience, and lower interest rates, as we said, this has led even Colman Sachs to revise its forecast upwards.
Their target price for the S&P 500 for this year has been raised from 5,600 to 6,000 points—a significant upward revision—and for next year, they have raised it from 6,000 to 6300 points for the S&P 500. So, an important review has been done in this case. Well, David Collins, uh, pending this week, this week is also going to be relevant, it's going to be important.
We have data like inflation on Thursday, that's going to have a lot of weight in expectations. Well, in fact, here you can see it: on Wednesday, the publication of the minutes from the last Fed meeting; on Thursday we'll have the inflation data; on Friday, the IPPS, the Producer Price Index in the United States.
But above all, the key will be that, in addition to having 18 speeches from Fed members expected this week, in fact, today we have two of them: Nil Cascarrhen, the president of the Minneapolis Fed, and Michelle Bowman. Their comments are also expected today. Here you have Nil Cascarrhen. Also, Rafael Bostick is expected to make headlines, along with Musalem, uh, the new governor of the Federal Reserve.
Tomorrow we'll look at Kugler, Bostick, and Collins. Also, again on the 9th, we'll have Bostick, Logan, and also Gosby. The minutes from the last Federal Reserve meeting. Uh, Susan Collins, also the president of the Boston Fed. And from there, we'll also be looking at Mary Daddy, the president of the San Francisco Fed, on October 10th, Barkin and Williams, and on the 11th, Gosby and also Lori Logan from the Fed.
Added to this data, as I was saying, with these references, today is the calmest day at the macro level in this case, but from tomorrow it will start to rise, and also this week the earnings season officially kicks off in the United States, especially from Thursday onwards. Friday is when the official starting gun is fired, especially with the financial sector.
Here you have Friday because we have names like JP Morgan, Wells Fargo, BlackRock, Bank of New York, Mellon, and Fastenal, among others. And next week we'll get into it fully, starting on Tuesday. We have the 11th, the 14th of October, along with the 21st, which are going to be the most intense regarding corporate earnings, which could undoubtedly become the next catalysts, considering that the background is the S&P 500 in this case.
Well, it has a better performance after the first rate cut, especially when the American economy avoids a recession over the next 12 months. So here you can see a bit of the average evolution, the statistics, the seasonal pattern, and especially waiting now for the presidential elections in the United States, which are in a month.
So today we're going to learn, as we said, statements from Fed members, the Conference Board's employment trend index, a little more at the macro level, and now let's move on to the corporate news. We have Apple, which is down more than 1% in pre-market trading. Jeffrey has lowered his expectations, especially given the lower expectations generated by the demand for the new iPhone, in this case the 16.
So it's down 1.4% right now. NXP Semiconductors is up 0.8% after an improved recommendation from analysts. Amazon is down 2%; analysts at WS Fargo have downgraded their recommendation. Pfizer... In this case, it seems that the activist investor Starboard Value has taken a position, or rather, increased its stake in the company by a value of 1 billion in this case, Faer shares rise by 3%.
So also keep an eye on these corporate moves by Starb Value. KB Home, the housing development company, falls by 2%. W Farg has downgraded its recommendation on the company. Coti is up 2.5. Jeffreys has upgraded its recommendation. Hershey's, the chocolate company, is up 1%. VS and Bernstein have also downgraded their recommendations, mainly due to higher cocoa prices as one of the key factors.
American Express is down 1%. JP Morgan analysts have also lowered their expectations on the company. Win Research, the casino operator, is up 2.5 after announcing that it has received its first gaming license in the United Arab Emirates. So 2.5 up for Win Research. And finally, Ali Financial is up more than 1% after an upgrade by analysts from JP Morgan.
So keep an eye on this start of the week, remember why it's important We closed last week with very good US jobs data. Let's see how the 10-year yield reacts above 4%. It's a key week: IPPS inflation, 18 speeches from Fed members, and we kick off earnings season, in this case for the third quarter. So we'll be keeping a close eye on that catalyst. Thanks to everyone for joining us, and best of luck with Vestas Opera.
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