U.S. Stock Market Preview | The three major index futures are mixed, with most tech stocks rising in pre-market trading. The breakdown of the U.S.-Iran ceasefire exacerbates concerns over the Federal Reserve's hawkish shift

Pre-Market Market Trends

1. As of July 9 (Thursday), U.S. stock index futures showed mixed results before the market opened. As of the time of publication, Dow futures were down 0.13%, S&P 500 futures were up 0.15%, and Nasdaq futures were up 0.64%.

1. As of the time of publication, the German DAX index was up 0.23%, the UK FTSE 100 index was down 0.61%, the French CAC 40 index was up 0.28%, and the Euro Stoxx 50 index was up 0.59%.

1. As of the time of publication, WTI crude oil was up 0.57%, priced at $73.94 per barrel. Brent crude oil was up 0.68%, priced at $78.55 per barrel.

Market News

Nearly 70% of U.S. tech stocks have entered bear market territory! AI faith faces a major test: profit-taking or peak of the cycle? The AI star stocks that have led the market in recent months are now collectively sputtering—69% of the components in the S&P 500 Information Technology sector have fallen over 20% from their 52-week highs and entered bear market territory. However, despite the significant sell-off, some analysts do not believe this necessarily indicates a trend reversal. They argue that profit-taking after a substantial rise is a natural process. Analysts have pointed out that tech stocks typically face pressure in the month following earnings releases, only to rebound before the next earnings report. Additionally, Goldman Sachs stated in a research report this week that there are currently no signs of a peak in the AI-driven tech upcycle. The report suggests that the supply of semiconductors and electronic components has not yet exceeded demand, and there are no signs of a slowdown in technological advancement. This Wall Street giant views the recent market adjustment as a healthy correction following rapid price increases, rather than a reversal of the tech stock trend. Goldman Sachs believes this cycle has the potential to become one of the largest and longest-lasting tech upcycles in history.

"Bond Vigilante" proponent Ed Yardeni: The breakdown of the ceasefire has brought the market back to square one, and rising oil prices may force the Fed to turn hawkish again. As the geopolitical crisis in the Middle East leads to soaring oil prices, inflation concerns and the prospect of Fed rate hikes have returned to the forefront of market worries. Ed Yardeni, president of Yardeni Research, warned that the end of the ceasefire has brought investors back to a "turning point," and the Fed may be forced to tighten monetary policy further. In an interview, the proponent of the "bond vigilante" concept stated, "Inflation concerns are starting to play a role again. The result is that the Fed is back in focus. The Fed is not only shifting towards tightening policy, but they may actually have to raise interest rates." "He described this situation as a 'geopolitical crisis that will not disappear and will not end.' Yardeny stated that the Federal Reserve has shifted from an accommodative stance to a hawkish focus on price stability. He observed that the labor market appears stable, but 'depending on what happens in the Middle East, all positive momentum could completely evaporate.'

The minutes of the first interest rate meeting under Walsh are out! Officials debate the path of interest rates, with some members believing a rate hike should have occurred in June. The minutes from the Federal Reserve's monetary policy meeting held from June 16 to 17 revealed that during the first interest rate meeting chaired by new Chairman Kevin Walsh, the decision-makers engaged in intense discussions about the future path of interest rates. Although the committee ultimately decided unanimously to maintain the federal funds rate target range at 3.50% to 3.75%, there were significant disagreements among officials regarding inflation trends and future policy directions, with some officials even believing there were reasons to raise rates at that time. The minutes indicated that a minority of participants felt the Federal Reserve had justification to increase borrowing costs during the June meeting, but ultimately supported keeping rates unchanged at this meeting. Overall, most officials believe that there are scenarios where inflation gradually returns to the 2% target, as well as risks of sustained high inflation; nearly all officials holding the latter view stated that if high inflation persists, a rate hike would be a necessary policy choice.

IMF pours cold water: The inflation aftermath of the US-Iran conflict is not so easy to dissipate. The International Monetary Fund (IMF) pointed out in its latest economic outlook report that the actual damage of the US-Iran conflict to the US and global economy is less than previously anticipated by the market, but this geopolitical turmoil will give rise to a new round of persistent inflationary pressures, making the issue of rising prices difficult to completely dissipate in the short term. The IMF stated that after a fragile ceasefire was reached between the US and Iran, the speed of the decline in international oil prices exceeded market expectations, but the inflation damage caused by the conflict has already occurred, and the recovery process will require a long period. Even if the US-Iran conflict fully comes to an end, US inflation is not expected to return to the Federal Reserve's 2% policy target range until the end of 2027, making it difficult to approach this standard in the short term. The IMF also warned that the US and global economies still face significant downside risks. On one hand, the situation in the Middle East remains unresolved and could escalate again, pushing up energy inflation; on the other hand, excessive market enthusiasm for the artificial intelligence industry, if expectations reverse, could trigger a deep correction in the stock market.

The escalation of the US-Iran conflict drags Gulf shipping volumes down to 70%, Goldman Sachs: The process of resuming oil production in the Middle East may be interrupted. Goldman Sachs pointed out that if geopolitical tensions in the Middle East escalate again and disrupt shipping in the Strait of Hormuz, the recovery process of oil supply in the region may be hindered. According to Goldman Sachs' estimates, in June of this year, crude oil production in the Gulf region was still about 10.5 million barrels per day lower than pre-war levels. Analysts led by Yulia Zhetkova Grigsby stated in a report on July 8: "Although oil-producing countries in the Middle East have begun to restart shut-in wells over the past month, if there is a disruption in navigation in the Strait of Hormuz, it may slow the pace of production recovery." This week, the global energy market experienced severe fluctuations due to the renewed escalation of the US-Iran conflict, with Brent crude futures briefly returning above $80 per barrel. After the US and Iran attacked each other for the second consecutive day, shipping traffic in the strait nearly came to a standstill, testing the previously fragile peace agreement, which had already seen multiple attacks on commercial vessels

Individual Stock News

Most U.S. tech stocks rose before the market opened. As of the time of writing on Thursday, Micron Technology (MU.US), Western Digital (WDC.US), and SanDisk (SNDK.US) rose over 4%, while Seagate Technology (STX.US) rose over 3%; Intel (INTC.US) rose over 33%, AMD (AMD.US) and Broadcom (AVGO.US) rose over 2%, and Qualcomm (QCOM.US) rose nearly 2%; among the "seven giants" of U.S. stocks, only NVIDIA (NVDA.US) and Tesla (TSLA.US) saw slight increases; optical communication stocks generally rose, with AXT Inc (AXTI.US) up over 6%, Corning (GLW.US) and Marvell Technology (MRVL.US) up over 5%, Lumentum (LITE.US), Astera Labs (ALAB.US), Credo Technology (CRDO.US), and Coherent (COHR.US) up over 4%, and Nokia (NOK.US) up over 2%.

PepsiCo (PEP.US) Q2 revenue exceeded expectations, but weak performance in the North American market dragged down profits. The financial report showed that PepsiCo's Q2 net revenue grew 6.4% year-over-year to $24.18 billion, better than the market expectation of $23.95 billion; operating profit was $4.02 billion, slightly below the market expectation of $4.06 billion; core earnings per share were $2.20, slightly better than the market expectation of $2.19. Despite revenue growth, profit performance was somewhat lacking. The core issue affecting performance came from the North American market. The company's management pointed out that sales in the U.S. food and beverage sector are slowing, inflation continues to squeeze household budgets, and consumers have to cut back on daily spending. Specifically, snack sales in North America were basically flat, while beverage sales fell by 4%. In contrast to North America, overseas markets continued to provide support—demand for snacks and beverages in international markets was relatively strong, driving overall snack sales up by 3% and beverage sales up by 2%. This helped offset the weakness in the North American market. Additionally, the company still forecasts organic revenue growth of 2% to 4% for the full year of 2026, with a midpoint of 3% better than the market expectation of 2.76%.

NVIDIA (NVDA.US) unveils self-developed large model Nemotron 3 Ultra: high cost-performance ratio, inference costs drop 90% compared to closed-source models. NVIDIA stated that its Deep Agents suite, specifically designed for Nemotron 3 Ultra, can achieve inference costs that are 10 times lower per run than some "leading" closed-source models, completing more tasks and achieving higher throughput. NVIDIA added that in comparison with LangChain's Deep Agents benchmark tests, Nemotron 3 Ultra performed comparably to the highest-scoring models in business tasks (with parity). NVIDIA's goal in developing large models has never been to compete directly with OpenAI or Anthropic by selling large model APIs, but rather to consolidate and expand its absolute dominance in the AI industry chain NVIDIA's biggest moat is not its chips, but its CUDA software ecosystem. Now, it is launching its own large models (such as Nemotron 3 Ultra) and packaging them into NVIDIA NIM (microservices framework), allowing enterprises to deploy and fine-tune on NVIDIA hardware with one click. NVIDIA is developing large models to make its software stack (AI Enterprise) more attractive, thereby firmly binding customers to NVIDIA's hardware and software ecosystem.

SpaceX (SPCX.US) collaborates with Cursor to launch Grok 4.5: targeting coding and financial tasks, challenging Anthropic and OpenAI. SpaceX's SpaceXAI has launched a new artificial intelligence model developed in collaboration with AI programming startup Cursor, aimed at more proficiently handling financial, legal, and programming tasks. This is part of Musk's strategy to gain an advantage in competition with rivals like Anthropic and OpenAI. According to a blog post released on Wednesday, this new model is designed to "handle difficult and long-running tasks," including software engineering, which is a core area of focus for many top AI developers. However, unlike Cursor's previous models, Grok 4.5 is designed to tackle a broader range of work, such as legal and financial services. The blog post states that Grok 4.5 also enhances cybersecurity capabilities.

Meta (META.US) invests $10 billion to build its first data center in Canada, creating the largest AI base overseas. Meta will invest approximately $10 billion to build its first data center in Canada to expand its infrastructure and support its ambitions in artificial intelligence. The data center will be located in Sturgeon County, Alberta, and will have a power capacity of 1 gigawatt (GW) — equivalent to the electricity consumption of about 750,000 households — and will primarily rely on natural gas for power. The company is expanding its global data center footprint to ensure access to more computing capacity. The Alberta project marks its 33rd data center. Meta plans to use this computing capacity for its own AI models and social media applications (including Instagram and Facebook), while also exploring the establishment of a cloud business to sell some capacity to other companies.

Important Economic Data and Event Forecast

Beijing time 20:30 Initial jobless claims in the U.S. for the week ending July 4

Beijing time 21:00 FOMC permanent voting member and New York Fed President Williams speaks

Earnings Forecast

Friday pre-market: Delta Air Lines (DAL.US)