U.S. Stock Market Outlook | Three major index futures mixed, U.S.-Iran agreement document, U.S. May PCE to be the market focus this week

Pre-Market Market Trends

1. As of June 22 (Monday), U.S. stock index futures showed mixed results before the market opened. As of the time of writing, Dow futures were up 0.08%, S&P 500 futures were down 0.05%, and Nasdaq futures were up 0.14%.

1. As of the time of writing, the German DAX index was down 0.20%, the UK FTSE 100 index was up 0.42%, the French CAC40 index was down 0.50%, and the Euro Stoxx 50 index was up 0.14%.

1. As of the time of writing, WTI crude oil was down 0.80%, priced at $75.24 per barrel. Brent crude oil was down 1.74%, priced at $78.66 per barrel.

Market News

Inflation is the most important barometer this week! After the Fed's hawkish stance, the May PCE inflation report is approaching, and Micron's earnings report will also gauge AI trends. The core focus of the market this week will be on inflation data, particularly the May Personal Consumption Expenditures (PCE) report, which is the inflation indicator favored by the Federal Reserve. The Fed believes that PCE can more accurately measure price changes because it uses business surveys rather than consumer surveys, thus incorporating a broader range of data. The PCE price index rose 3.8% year-on-year in April, far exceeding the 2% target, marking the largest increase in three years. This is the first significant inflation data since the Fed officials announced their interest rate decision last week. As the Fed Chair hopes to reduce reliance on economic forecasts, investors may pay closer attention to the PCE and other economic indicators. The market will also closely monitor a series of speeches by Fed officials this week to further understand how decision-makers interpret recent inflation developments and whether officials continue to support a "higher for longer" policy outlook. In terms of earnings reports, FedEx and Micron Technology will be the highlights on the earnings calendar, with Micron providing another important update on AI-related demand and memory price trends.

Iran announces: After 18 hours of negotiations, an agreement document has been reached between the U.S. and Iran! Qatar and Pakistan release a joint statement: The first round of high-level talks between the U.S. and Iran has concluded with encouraging progress. Iranian Foreign Ministry spokesman Baghaei stated that Iran and the U.S. reached an agreement document after 18 hours of negotiations, and the relevant text will be released by the two mediators, Qatar and Pakistan. Baghaei mentioned that the discussions included topics such as issuing licenses for Iranian oil sales and unfreezing Iranian assets, achieving good progress. After the conclusion of the first round of high-level talks between the U.S. and Iran, Iranian negotiation team member and Foreign Minister Amir-Abdollahian stated that Iran's oil and petrochemical product exports have been exempted, the U.S. maritime blockade has been lifted, some frozen assets have been released, and a significant reconstruction and development plan for Iran has been initiated Alagzi also stated that Pakistan and Qatar have made significant progress in mediating to end the Lebanese war. As a mediator in the negotiations between the United States and Iran, Qatar and Pakistan issued a joint statement today (June 22) regarding the conclusion of the first round of high-level committee meetings between the U.S. and Iran. The joint statement noted that the meeting achieved encouraging progress, including the establishment of a mechanism for further technical negotiations.

Not afraid of interest rate hikes? The Federal Reserve's "new policy" may not hinder the bull market! The new chairman of the Federal Reserve, Kevin Warsh, is attempting to break the long-standing tradition of "forward guidance." He believes that the Federal Reserve should reduce its interventionist rhetoric and instead allow financial markets to price themselves, serving as a "weather vane" for guiding the economy, interest rates, and inflation expectations. For investors, the Warsh era at the Federal Reserve may mean a more volatile market environment with less intervention. While interest rate hikes may harm the Federal Reserve's short-term "popularity," demonstrating a determination to combat inflation through this "hardcore" approach may actually strengthen the market's credit foundation in the long run. Before the AI premium is completely exhausted, this bull market may still have a "second half" to look forward to. Meanwhile, the interest rate hike cycle does not equate to the end of the bull market. Historical data shows that in four out of the five interest rate hike cycles since the early 1990s, the S&P 500 index rose during the rate hike period.

Signals of reopening the Hormuz Strait are becoming increasingly strong! Kuwait requires buyers to "self-pick up" refined oil, and Qatar urgently recalls empty LNG ships. It is reported that Kuwait is adjusting its refined oil export method, requiring buyers to pick up goods at its ports. This change means that the flow of related goods will once again rely on transportation routes crossing the Hormuz Strait, which is seen by the market as one of the signals of the gradual restoration of regional energy flows. Kuwait's move resonates with other dynamics in the region. As the U.S. and Iran reach a temporary peace agreement, energy production and transportation activities are gradually resuming. Mediators disclosed in follow-up talks last weekend that both sides have established a communication mechanism to reduce misjudgments and ensure the safe passage of merchant ships through the Hormuz Strait. In addition, Qatar has initiated preparations to restart liquefied natural gas (LNG) exports. To quickly restore this export system, which accounts for about one-fifth of global supply, Doha is focusing on reallocating transportation capacity and recalling previously stranded empty transport ships. Doha has set a goal to gradually restore most of its export capacity within two months after safe passage through the Strait is resumed.

U.S.-Iran negotiations trigger changes in the oil market: Excessive bets in the options market reignite, IEA warns of "significant oversupply" strongly rebutted by OPEC. As the U.S. and Iran are about to reach a peace agreement and navigation through the Hormuz Strait is expected to gradually resume, international oil prices have fallen to a three-month low. Market logic has sharply shifted from "supply disruption panic" to "supply surplus expectations," with previously forgotten crude oil surplus options bets suddenly reviving. Just as market sentiment shifted, the International Energy Agency (IEA) released its monthly oil market report last Wednesday, significantly lowering demand forecasts and issuing its first "significant oversupply" warning for 2027. The report revised down the global average daily demand growth expectation for 2026 by 700,000 barrels to 1.1 million barrels per day, citing that high oil prices and refined oil shortages have severely eroded consumption. However, the IEA's oversupply prediction was met with a strong rebuttal from OPEC

Individual Stock News

SpaceX (SPCX.US) may face a three-day decline, rumored to issue at least $20 billion in bonds. As of the time of writing, SpaceX's stock fell nearly 6% in pre-market trading on Monday. The stock has been volatile following the largest IPO in history. It dropped 3.6% last Thursday, with a cumulative decline of 8.3% over two days. Nevertheless, the closing price last Thursday was still 37% higher than the IPO price of $135. According to insiders, SpaceX's investment banking team is expected to hold a conference call with investors this week to discuss the bond issuance following the company's record IPO. The bond issuance is expected to be at least $20 billion, with the investor communication possibly starting as early as Monday, and the related issuance plan and timeline may still be subject to adjustments.

U.S. space stocks fell in pre-market trading. As of the time of writing on Monday, Momentus (MNTS.US) fell over 5%, Redwire (RDW.US) dropped over 4%, Rocket Lab (RKLB.US) declined nearly 3%, Firefly Aerospace (FLY.US), Intuitive Machines (LUNR.US), and AST SpaceMobile (ASTS.US) fell over 2%, while Voyager Technologies (VOYG.US) dropped nearly 1%.

Microsoft (MSFT.US) CEO calls for a reshaping of the AI industry: moving away from the competition of large models to a more inclusive and cost-effective approach. Microsoft CEO Satya Nadella urged a different approach to artificial intelligence (AI) development, stating that the industry must break free from the dominance of a few companies that continuously build ultra-large models, and instead focus on broader applications, reducing costs, and gaining public trust. Nadella made these comments as Microsoft is launching a series of low-cost AI products aimed at helping customers alleviate the pressure from rapidly increasing AI expenditures. The company recently introduced its autonomous AI assistant, Copilot Cowork, which allows users to choose from multiple AI models, including some lower-cost alternatives, for executing long-running tasks. Although Microsoft has developed its own AI systems, it still lags behind some competitors in consumer adoption. Research from Recon Analytics found that by the second half of 2025, many Copilot users are gradually turning to competing tools like Google Gemini. Microsoft seems to be shifting its focus from merely creating cutting-edge models to making AI models interchangeable and widely accessible.

Microsoft (MSFT.US) signs a 20-year power supply agreement with Chevron (CVX.US) to provide energy for its Texas data center. Microsoft has signed a 20-year agreement with Chevron, under which Chevron will supply natural gas-generated electricity for a data center to be built in West Texas, USA. This data center is expected to become one of the largest projects in the United States. Chevron's power generation project will utilize cheap natural gas from the largest oil field in the U.S.—the Permian Basin—using multiple large gas turbines produced by GE Vernova to power the data center campus Microsoft plans to build near Pecos, Texas As AI competition heats up, Microsoft is accelerating the construction of data centers to compete with Google and Amazon for AI market share. As a long-time supporter of OpenAI and its product ChatGPT, Microsoft plans to double the scale of its data centers in the next two years. This collaboration with Chevron, one of the largest natural gas producers in the U.S., aims to ensure a stable power supply for the large-scale needs of AI models.

Premium as high as 60%! AbbVie (ABBV.US) spends $10.9 billion to acquire Apogee (APGE.US). AbbVie will acquire the anti-inflammatory drug developer Apogee Therapeutics for $10.9 billion, with the deal expected to close in the third quarter of this year. AbbVie stated that the transaction is expected to enhance the company's adjusted earnings per share starting in 2032. This deal will further strengthen AbbVie's immunology product line, which is led by its anti-inflammatory drugs Humira, Skyrizi, and Rinvoq, which generated a total revenue of $30.4 billion last year, an increase of approximately 14% year-on-year. As of the time of writing, in pre-market trading on Monday, Apogee surged nearly 51%, while AbbVie rose nearly 1%.

Important Economic Data and Event Forecast

At 21:00 Beijing time, Federal Reserve Governor Waller will deliver a welcome speech at a meeting regarding the international role of the U.S. dollar.

Earnings Forecast

Pre-market on Tuesday: JiaYin Technology (JFIN.US)