U.S. Stock Market Preview | Three major index futures mixed, chip and optical communication stocks rise before the market opens, Wall Street maintains consensus on a bull market in the second half of the year

Pre-Market Market Trends

1. As of July 6 (Monday), U.S. stock index futures are mixed before the market opens. As of the time of publication, Dow futures are down 0.20%, S&P 500 futures are up 0.32%, and Nasdaq futures are up 1.08%.

1. As of the time of publication, Germany's DAX index is down 0.10%, the UK's FTSE 100 index is down 0.38%, France's CAC 40 index is up 0.04%, and the Euro Stoxx 50 index is down 0.21%.

1. As of the time of publication, WTI crude oil is down 0.23%, priced at $68.53 per barrel. Brent crude oil is down 0.25%, priced at $71.94 per barrel.

Market News

Amid inflation concerns, U.S. stocks welcome a "calm week": Services PMI and consumer giants' earnings reports take center stage, with SK Hynix's IPO on Friday becoming the highlight. After a trading week filled with a plethora of labor market data and an unexpected non-farm payroll report, and shortened due to the holiday, investors will enter a relatively calm period in the coming week. Monday is likely to be the most noteworthy day on the economic calendar, as a series of index readings from S&P Global and the Institute for Supply Management (ISM) will provide insights into the state of the U.S. services economy. In terms of corporate earnings, PepsiCo (PEP.US) on Thursday and Delta Air Lines (DAL.US) on Friday will be the focus of the week. PepsiCo's performance should give investors insight into the current state of U.S. consumers, while Delta Air Lines will provide another interpretation of the lasting impacts of the Iran war and the resulting energy crisis. SK Hynix is expected to list on Nasdaq on July 10 (Friday), with a $29 billion IPO plan that could become the largest foreign company IPO in U.S. history.

Wall Street's outlook for the "second half" of 2026: Bull market consensus remains unchanged, but "AI solo dance" is shifting to "multiple blooms." After a tumultuous first half marked by geopolitical turmoil, rollercoaster oil prices, and drastic swings in interest rate expectations, Wall Street is entering the second half of 2026 with more confidence. Despite significant divergences among major institutions regarding the year-end target for the S&P 500 index—ranging from the most pessimistic 7000 points to the most optimistic 8250 points, a span of over 1200 points—the overall tone remains bullish. The core of the consensus is: the U.S. stock bull market is not over, but the main line of profit may shift from the overcrowded chip and artificial intelligence (AI) "shovel stocks" to a broader range of sectors including industrials, healthcare, materials, and small to mid-cap stocks A 9% increase this year may vanish! Bank of America warns: Speculative sentiment has reached extremes, and the U.S. stock market is brewing a severe "correction." The S&P 500 index has just recorded its best quarterly performance since 2020, with a cumulative increase of about 9% so far this year. However, Bank of America believes that the good times may be coming to an end, and the market's next moves are likely to be dominated by the following behaviors. Bank of America analysts reiterated their target price for the benchmark index at 7,100 points by the end of 2026, implying a decline of about 5% from last week's closing level. Bank of America pointed out: "The bear market signals we monitor indicate that speculative sentiment is trending towards extremes, with overvalued stocks experiencing significant gap-up increases. Historically, such situations are often precursors to a 'severe correction' in valuations." The bank further stated that, compared to historical trends, the current ratio of free cash flow to net profit generated by S&P 500 constituent companies is relatively low, primarily due to so-called "super-large enterprises" significantly increasing capital expenditures amid the AI wave, leading to a sharp decline in free cash flow, which in turn erodes overall profit quality.

AI trading sentiment shifts! Morgan Stanley voices: The upward momentum of chip stocks is weakening, and funds will rotate to super-large cloud vendors. Morgan Stanley strategist Michael Wilson stated that as investors withdraw from some of the strongest-performing tech stocks this year, the U.S. stock market will struggle to reach new highs. Meanwhile, Wilson noted that as investors shift funds to previously underperforming sectors—including artificial intelligence (AI) super-large cloud computing vendors—the upward momentum of semiconductor stocks is weakening. He pointed out that this group includes companies like Microsoft, Amazon, and Meta. With strong core businesses, these companies are attractive in the AI ecosystem. The strategist indicated that in the short term, major U.S. stock indices will continue to face pressure, "because some of the largest companies by market capitalization in the index are experiencing a momentum pullback." He added that this rotation of funds will continue in an "overall weak and volatile stock market environment."

Recovery of shipping flows through the Strait of Hormuz combined with OPEC+ tentative production increases: Wall Street is bearish on oil prices for the second half of the year, with Citigroup warning they may drop to $60 by year-end. The continuous shipping flow through the Strait of Hormuz, along with OPEC+ signaling an increase in supply, has intensified market concerns about an oversupply of crude oil. OPEC+ member countries support a moderate increase in production quotas next month, with seven countries led by Saudi Arabia and Russia agreeing to increase daily production by 188,000 barrels, further reducing the production cuts implemented a few years ago. Currently, this additional production remains theoretical, but the organization's decision indicates their desire to increase output as the situation continues to normalize. Against this backdrop, Wall Street investment banks predict further significant declines in prices in the second half of this year, with Citigroup noting that prices could fall to $60 by year-end.

Individual Stock News

U.S. chip stocks rise before the market opens. On Monday, before the U.S. market opened, as of the time of writing, Western Digital (WDC.US) and SanDisk (SNDK.US) rose over 5%, Micron Technology (MU.US), Seagate Technology (STX.US), AMD (AMD.US), and Intel (INTC.US) rose over 3%, while Broadcom (AVGO.US) rose nearly 3% In addition, ASML (ASML.US) rose over 4%, and TSMC (TSM.US) increased nearly 3%.

U.S. optical communication stocks rose in pre-market trading. As of the time of writing on Monday, AXT Inc (AXTI.US) was up over 6%, Marvell Technology (MRVL.US), Astera Labs (ALAB.US), and Nokia (NOK.US) rose nearly 4%, Credo Technology (CRDO.US) increased over 3%, Corning (GLW.US) and Tower Semiconductor (TSEM.US) were up over 2%, and Coherent (COHR.US) rose nearly 2%.

Manufacturing process "bottleneck"! Nvidia (NVDA.US) next-generation AI rack system Kyber may be delayed until 2028. According to research firm SemiAnalysis, due to manufacturing process issues, Nvidia's next-generation artificial intelligence (AI) rack system Kyber may be delayed until 2028. This is the latest in a series of product delays from Nvidia, raising further market attention on the product roadmap of this AI giant. The Kyber NVL144 is a server cabinet that can integrate 144 of Nvidia's most powerful chips into a single system, allowing them to work together like a supercomputer, providing the computing power needed for AI companies to train and run advanced models. The architecture installs graphics processing unit (GPU) compute trays vertically rather than horizontally to increase chip integration density and reduce latency, originally planned to launch in 2027 alongside the Vera Rubin Ultra—Nvidia's next-generation rack-level system. SemiAnalysis reported on Monday that this delay is due to the high difficulty of manufacturing the system's core circuit board. The firm stated, "Due to significant challenges in the manufacturing process of the PCB midplane, the Kyber NVL144 rack architecture has been delayed until 2028."

Solstice Advanced Materials (SOLS.US) is in talks to merge with Element Solutions (ESI.US), potentially creating a $27 billion specialty chemicals giant. Solstice Advanced Materials is in discussions with Element Solutions for a "merger of equals," with the combined specialty chemicals giant potentially valued at $27 billion. Reports indicate that negotiations between the two companies are ongoing, with a deal possibly being reached as soon as this week. However, no formal agreement has been made yet, and there remains a possibility of the talks breaking down. The negotiations come as both companies seek to capitalize on the growing demand for specialty chemicals driven by AI data centers and semiconductor manufacturing. Solstice stated in May that its business continues to grow due to the increasing demand for its thermal management products and refrigerants driven by AI-powered data centers, as well as the ongoing demand for advanced computing solutions in the semiconductor electronic materials sector. Element Solutions primarily supplies specialty chemicals to the electronics manufacturing industry The company stated that its revenue in the first quarter of this year increased by more than 40% year-on-year, mainly driven by demand related to AI.

Important Economic Data and Event Forecast

Beijing time 22:00 US June ISM Non-Manufacturing PMI

Beijing time 23:00 Federal Reserve Governor Waller, European Central Bank Executive Board Member Schnabel, European Central Bank Governing Council Member Wunsch, and Deputy Governor of the Swedish Central Bank Säm will give speeches