U.S. Stock Market Outlook | Futures for the three major indices rise together, oil prices continue to decline, chip and optical communication stocks rise in pre-market, SpaceX to announce earnings after hours

Pre-Market Market Trends

1. As of August 4th (Tuesday), U.S. stock index futures are all up before the market opens. As of the time of writing, Dow futures are up 1.08%, S&P 500 futures are up 0.36%, and Nasdaq futures are up 1.16%.

1. As of the time of writing, the German DAX index is up 0.70%, the UK FTSE 100 index is up 0.50%, the French CAC 40 index is up 0.34%, and the Euro Stoxx 50 index is up 0.82%.

1. As of the time of writing, WTI crude oil is down 3.71%, priced at $77.36 per barrel. Brent crude oil is down 2.92%, priced at $81.32 per barrel.

Market News

U.S. Treasury Secretary: Agreement with Iran to open the Strait of Hormuz may be reached tomorrow. According to U.S. media reports on the 4th, U.S. Treasury Secretary Janet Yellen stated that the U.S. may reach an agreement with Iran tomorrow to open the Strait of Hormuz.

Goldman Sachs Partner: Earnings are the core driving force, S&P 500 is expected to reach a new historical high this year. Strong corporate earnings are providing the most robust support for U.S. stock bulls. Goldman Sachs partner John Flood believes that as market positions become "cleaner," the S&P 500 index is expected to reach a new historical high this year, driven by the core logic of earnings. According to Goldman Sachs data, the year-on-year growth rate of S&P 500 earnings per share in the second quarter reached 45%, far exceeding the market consensus expectation of 22% at the beginning of the quarter. Even excluding non-recurring items such as "other income" related to approximately $151 billion in equity investments from Google and Amazon, the growth rate of S&P 500 earnings per share still reached 26%, accelerating from the first quarter and marking the fastest growth rate since 2021. From the perspective of revision breadth, the number of companies in the S&P 500 with upward revisions in earnings expectations continues to exceed those with downward revisions, maintaining a positive revision breadth. Goldman Sachs believes that this comprehensive upward revision trend is an important foundation supporting market valuations. John Flood pointed out that the main dividends of the AI supercycle have not yet been fully released, and the world's largest technology companies are continuously increasing capital investment, expanding the breadth and depth of earnings improvement.

Castle Securities: Retail investor speculation enthusiasm has cooled, but the core logic of U.S. stock market rise remains "intact." Castle Securities stated that although retail investors' speculative trading has significantly cooled recently, the core driving factors that pushed U.S. stocks to historical highs this year remain "intact," and the market is gradually shifting from being driven by capital flows to being driven by corporate fundamentals Scott Rubner, the head of stock and stock derivatives strategy at Castle Securities, stated in a recent report: "The market is transitioning from a capital flow-driven environment back to a phase increasingly dominated by corporate earnings, company stock buybacks, and the macroeconomic environment." Rubner believes that after a certain release of the "excessive speculation" accumulated in the market, the fundamentals of the U.S. stock market have become healthier. Recent corporate earnings reports have shown strong overall performance, with most companies' profits exceeding the already high market expectations, providing support for the subsequent stock market trends.

"Sleeping Giant" Awakens: $30 Trillion U.S. Treasury Market in Turmoil, How Long Can U.S. Stocks Hold Up? The U.S. Treasury market, long regarded as the "sleeping giant" of the global financial core market, is undergoing significant changes. With a scale of approximately $30 trillion, the U.S. Treasury market is a crucial foundation of the global financial system. In the coming days to weeks, investors are concerned that the sharp fluctuations in U.S. Treasury yields may further transmit to other asset markets such as stocks. After a sustained rise in early July, long-term U.S. Treasury yields accelerated significantly upward in the last week of July. Some market participants believe this trend reflects that investors are testing the Federal Reserve's determination to curb inflation. Historical experience shows that when U.S. Treasury yields approach current levels, financial pressures often begin to spread to other markets and may weigh on the stock market. As investors start to guard against further interest rate increases, the ICE Bank of America Merrill Lynch MOVE Index, which measures expected volatility in the U.S. Treasury market, continues to rise, reaching its highest level since May. Meanwhile, demand for put options related to the iShares 20+ Year Treasury Bond ETF is also increasing, driving up the ratio of put options to call options.

Communication from Waller Triggers Trust Crisis, JPMorgan Advances Fed Rate Hike Expectations to This December. The press conference held by Federal Reserve Chairman Waller after last week's policy meeting raised concerns in the market about the Fed's ability to combat inflation. JPMorgan's economic team believes that Waller failed to clearly articulate the future policy path, thereby undermining market confidence in the Fed's control over inflation, and has thus adjusted rate predictions earlier. Michael Feroli, JPMorgan's Chief U.S. Economist, and his team stated that after the Fed's credibility is damaged, the urgency for policy tightening is rising, and the next rate hike may be advanced from the previously predicted second half of 2027 to this December. However, the team also acknowledged that the Fed may take action as early as the September meeting.

Escalating Attack Risks, Shipping Traffic in the Strait of Hormuz Drops to Freezing Point. According to monitoring by shipping data companies Kpler and Vortexa, the visible traffic flow in the Strait of Hormuz has been reduced to sporadic levels. Just this Monday, only three oil tankers passed through the strait, a significant drop from seven the previous Sunday. To avoid potential attacks, an increasing number of oil tankers are choosing to turn off their signal transmitters and enter "stealth mode" while navigating through critical waters. Additionally, U.S. media reported on the 3rd, citing Iranian and American officials, that Iran and Oman are nearing an agreement regarding navigation in the Strait of Hormuz. According to the reported agreement being discussed, vessels entering the Persian Gulf will navigate through a route close to the Iranian coast and controlled by Iran, while outgoing vessels will take a route closer to Oman However, Iranian officials stated that even if Iran reaches an agreement with Oman, the Strait of Hormuz will remain closed if the U.S. does not lift the blockade on Iranian ports and does not resume the implementation of the 14-point memorandum of understanding previously reached between Iran and the U.S.

Stockpiling 200,000 tons! The U.S. is experiencing a record copper import surge, betting on Trump's next tariff move. The U.S. is witnessing the largest copper import surge in at least 12 years, with traders betting on the refined copper tariff policy that President Trump is expected to announce, preemptively bringing large amounts of copper resources to the U.S. Shipping data shows that over 200,000 tons of copper entered the U.S. in July this year, setting a record for the highest monthly level since IHS Markit began tracking in 2014. Meanwhile, U.S. copper inventories continue to rise, with total inventories at the Commodity Exchange (COMEX) and the London Metal Exchange (LME) exceeding 740,000 tons as of last Friday. LME data also shows that copper inventories in private storage at U.S. ports have reached about 110,000 tons. The influx of copper into the U.S. is changing the global supply landscape. Due to significantly higher prices in the U.S. market compared to the London market, traders are increasingly transporting copper from other regions to the U.S. to take advantage of the arbitrage opportunities created by tariff expectations.

Individual Stock News

Chip stocks and optical communication stocks rise before the market opens. On Tuesday, prior to the U.S. stock market opening, as of the time of writing, in the chip sector, Western Digital (WDC.US) rose nearly 7%, Seagate Technology (STX.US) rose nearly 6%, SanDisk (SNDK.US), Intel (INTC.US), and AMD (AMD.US) rose over 5%, SK Hynix (SKHY.US) and Micron Technology (MU.US) rose over 4%, Qualcomm (QCOM.US) and Broadcom (AVGO.US) rose nearly 3%; in the optical communication sector, Coherent (COHR.US) surged over 17%, Lumentum (LITE.US) rose over 14%, Corning (GLW.US) rose over 9%, Marvell Technology (MRVL.US) and Astera Labs (ALAB.US) rose nearly 8%, Credo Technology (CRDO.US) rose over 7%, and Nokia (NOK.US) rose over 5%.

After the most expensive IPO in history, who can save SpaceX (SPCX.US) from its trillion-dollar valuation with Starship, Starlink, and AI computing power? After experiencing a brutal sell-off that halved its stock price from its peak and evaporated over $500 billion in market value, Elon Musk's SpaceX will release its first earnings report since going public after the U.S. stock market closes on Tuesday. This report will not only test its extremely cash-burning business model but also represent a significant showdown between bulls and bears against the backdrop of an impending unlock of restricted shares and a sharp rise in short-selling pressure. The market will focus on the number of Starlink users, satellite internet revenue, rocket launch frequency, government contracts, and expenditures on the Starship project. Given the significant volatility in SpaceX's stock price since its IPO, this first earnings report will help investors assess whether the company's business model, profitability, and cash flow can support its high valuation The largest AI supplier of the U.S. military reports explosive performance! Palantir (PLTR.US) significantly raises its full-year expectations, with the CEO stating that commercial demand is "extraordinary." The financial report shows that Palantir's Q2 revenue increased by 94.0% year-on-year to $1.94 billion, exceeding expectations by $130 million; adjusted earnings per share were $0.41, surpassing expectations by $0.06. The company stated that U.S. commercial sales in the second quarter were "stunning," soaring 149% year-on-year to $764 million, far exceeding the average analyst expectation of $716.4 million. Palantir currently expects sales to reach $8.16 billion by 2026, higher than the average analyst expectation of about $7.7 billion; it anticipates adjusted operating profit for the full year to be between $4.89 billion and $4.91 billion, above the previous upper forecast limit of $4.45 billion. The stronger outlook helps alleviate investor concerns. Previously, investors worried that AI developers like Anthropic selling their own software, along with governments outside the U.S. increasingly favoring domestic tech companies, could harm Palantir's business. As of the time of writing, Palantir's stock surged over 16% in pre-market trading on Tuesday.

The AI craze spills over into the power chain! ON Semiconductor (ON.US) Q2 performance and Q3 outlook both exceed expectations. The company reported Q2 revenue of $1.6 billion, a year-on-year increase of 9.2%, slightly exceeding the average analyst expectation of about $1.59 billion; adjusted earnings per share were $0.74, a year-on-year increase of about 40%, higher than the market expectation of $0.71. The company expects Q3 revenue to be between $1.65 billion and $1.75 billion, with the midpoint of the forecast range above the average analyst expectation of $1.67 billion; it anticipates adjusted earnings per share for Q3 to be between $0.81 and $0.93, with the midpoint of the forecast range also significantly above the average analyst expectation of $0.83. This strong outlook reflects a surge in demand for power management chips used in AI data centers. The company's CEO stated, "The AI data center-related business remains our fastest-growing segment, and we currently expect this business to at least double its revenue by 2026, reflecting the strong capabilities of our smart power product portfolio and the expanding adoption of ON Semiconductor across the entire power tree architecture." As of the time of writing, ON Semiconductor's stock rose over 8% in pre-market trading on Tuesday.

Leveraging the weak yen and hybrid dividends! Toyota Motor (TM.US) spends a trillion yen on stock buybacks and significantly raises its profit expectations for the fiscal year 2027. The financial report shows that Toyota's sales for the first quarter of the fiscal year 2027 were 13.5 trillion yen, a year-on-year increase of 10.4%; net profit attributable to the parent company was 1.48 trillion yen. The company benefited from the continued popularity of hybrid vehicles in the U.S., which, combined with the weak yen in the first half of the fiscal year, provided a buffer against soaring raw material costs and supply chain disruptions caused by the Middle East conflict. Meanwhile, the company announced a stock buyback plan worth 1 trillion yen (approximately $6.3 billion) and raised its profit expectations. Toyota raised its operating profit forecast for the fiscal year ending in March next year by more than 10% to 3.4 trillion yen, while the average analyst forecast is 3.9 trillion yen World Cup advertising warms up, Snap (SNAP.US) Q2 revenue exceeds expectations. The financial report shows that Snap achieved revenue of $1.6 billion in the second quarter ending June 30, a year-on-year increase of 19%, significantly higher than the average analyst expectation of $1.54 billion. Among them, advertising revenue, which accounts for a large portion of total revenue, grew by 9% year-on-year to $1.28 billion. The net loss narrowed significantly from $262.6 million in the same period last year to $164 million. Adjusted profit reached $250 million, significantly better than the market expectation of $192 million. The outstanding performance of Snap's advertising business this quarter is largely attributed to the boost from FIFA World Cup-related marketing expenditures and a noticeable improvement in the advertising spending momentum from major advertisers in North America. As of the time of publication, Snap's stock rose nearly 7% in pre-market trading on Tuesday.

Pfizer (PFE.US) Q2 performance exceeds expectations, raises full-year revenue guidance. The financial report shows that Pfizer's revenue in the second quarter was $15.03 billion, better than the market expectation of $14.41 billion; adjusted earnings per share were $0.77, better than the market expectation of $0.68. The company expects full-year revenue to be between $60.5 billion and $62.5 billion, higher than the previous expectation of $59.5 billion to $62.5 billion, but the midpoint of the forecast range is lower than the market estimate of $61.8 billion. The company also maintained its full-year adjusted earnings per share guidance at $2.80 to $3.00, with analysts expecting $2.94. Pfizer also separately announced that it is expanding two cost-cutting plans, expecting the total net savings from the two plans to increase to $9.7 billion by 2029.

Important Economic Data and Event Forecast

Beijing time 22:00 U.S. June JOLTs job openings

Earnings Forecast

Wednesday morning: SpaceX (SPCX.US), AMD (AMD.US), Arista Networks (ANET.US), Astera Labs (ALAB.US)

Wednesday pre-market: Honda (HMC.US), Novo Nordisk (NVO.US), Disney (DIS.US), Uber (UBER.US), Eli Lilly (LLY.US), CVS Health (CVS.US)