U.S. Stock Market Outlook | Three Major Index Futures Rise Together, Oil Prices Slightly Rebound, SpaceX Plummets After Earnings

Pre-Market Market Trends

1. As of August 5th (Wednesday), U.S. stock index futures are all up before the market opens. As of the time of writing, Dow futures are up 0.51%, S&P 500 futures are up 0.46%, and Nasdaq futures are up 0.21%.

1. As of the time of writing, the German DAX index is up 0.15%, the UK FTSE 100 index is down 0.05%, the French CAC 40 index is up 0.08%, and the Euro Stoxx 50 index is up 0.13%.

1. As of the time of writing, WTI crude oil is up 0.55%, priced at $76.19 per barrel. Brent crude oil is up 1.05%, priced at $80.19 per barrel.

Market News

Reports suggest a temporary agreement to reopen the Strait of Hormuz is "close to being reached," but shipping risks in the Red Sea are rising. According to regional sources and U.S. officials, the U.S., Iran, and Oman are "close to reaching" a temporary agreement to reopen the Strait of Hormuz, with the U.S. hoping to announce the agreement on August 5th. Reports indicate that negotiations surrounding the temporary agreement for reopening the Strait of Hormuz have been ongoing for weeks. The temporary agreement aims to restore a ceasefire between the U.S. and Iran and restart negotiations regarding the Iran nuclear deal, while "partially meeting Iran's demands for greater control over passage through the Strait of Hormuz, a level of control that Iran did not possess before the conflict." Meanwhile, shipping risks in the Red Sea are escalating, with the Houthi rebels in Yemen issuing new threats against Middle Eastern shipping. The Houthis stated on Wednesday that they used ballistic missiles to attack a Saudi oil tanker named "Wafa" in the Red Sea north of Yanbu, claiming the missiles hit the target directly.

U.S. tech stocks stage a major comeback! Earnings season reignites AI faith, with Nasdaq 100 market value soaring by $3.5 trillion in four days. The performance of U.S. second-quarter earnings season has far exceeded expectations, leading investors to regain confidence that massive AI investments will not only continue but have already begun to yield returns for some industry giants. As a result, U.S. tech stocks have experienced a dramatic reversal, driving the market value of the Nasdaq 100 index up by $3.5 trillion in just four trading days. This rebound also marks a rapid counterattack for the Nasdaq 100 index. More importantly, the rebound in the tech sector is broad-based, with semiconductor companies, software firms, and large-scale cloud computing enterprises that have made significant capital expenditures all seeing gains. Deutsche Bank strategist Parag Tati and others believe that the trend of funds flowing out of mega-cap tech stocks bottomed out last week. Since then, market positions in these stocks have seen a moderate recovery, indicating further upside potential in the future JP Morgan believes that if the market's core narrative around AI shifts from "is capital expenditure excessive?" to "investment returns are being realized," the next phase of tech stock gains may come more from internal sector rotation rather than solely relying on continued gains in chip stocks.

Fearless of the tech stock surge! "Big Short" Michael Burry remains firmly bearish, warning that U.S. stocks may be approaching a significant top. Despite the S&P 500 index reaching a new all-time high, the "Big Short" Michael Burry, known for successfully predicting the 2008 financial crisis, maintains his bearish stance and warns that the current U.S. stock market may be nearing a significant top, with the possibility of a sharp decline similar to the "Black Monday" of 1987. Burry remains one of Wall Street's most steadfast skeptics of the AI boom. He believes that the current demand for AI infrastructure investment is largely driven by some potentially unsustainable financing arrangements, rather than being entirely based on healthy fundamentals. He points out that the current market rally is forming a self-reinforcing cycle— as market volatility decreases, volatility-targeting quantitative funds will passively increase their stock positions, while other momentum strategy funds will further leverage, thereby continuing to push the market higher.

Dalio dissects the "paper wealth" trap, warning that the AI boom may replicate the bubble moments of 1929 and 2000. Ray Dalio, founder of Bridgewater Associates, has issued the most severe market warning to date, stating that the current investment frenzy around AI is pushing the market toward a bubble phase similar to those of 1929 and 2000. He believes that the current market has created a large amount of paper wealth, but this wealth does not represent real cash flow. He points out that the current market exhibits multiple typical characteristics of a bubble—SpaceX completing the largest IPO in history, valuations of Anthropic and OpenAI continuing to soar, and a large amount of capital chasing AI assets that have not yet fully realized profitability. He adds that the two main factors that typically drive a bubble to burst are rising interest rates and large-scale stock issuance by companies. When financing costs rise and investor sentiment reverses, overvalued assets may come under pressure quickly.

Wash's ambiguous statements trigger a trust crisis for the Federal Reserve, with Barclays, HSBC, and other major banks supporting inflation-protected bonds. Despite Federal Reserve Chairman Kevin Wash repeatedly emphasizing the core stance against inflation, the market still questions the timeliness of his policy actions and his commitment to combating inflation. Against this backdrop, top international investment banks like Barclays and HSBC have voiced their support for the allocation value of U.S. inflation-protected bonds, believing that these types of inflation-protected bonds will continue to outperform ordinary government bonds. Among them, Barclays' U.S. inflation market strategist Jon Hill stated, "I expect the market to price in higher inflation risks into the yield curve, as the credibility of the previously interpreted 'dovish pause' stance is in doubt. This will mean that the breakeven inflation rate will widen, and the performance of inflation-protected bonds will significantly outperform traditional ordinary bonds."

Individual Stock News

Performance exceeding expectations cannot compete with the AI cash burn black hole! SpaceX (SPCX.US) Q2 capital expenditures surged to approximately $18.4 billion. The financial report shows that SpaceX's revenue in the second quarter increased by 90.2% year-on-year to $7.8 billion, exceeding market expectations by $980 million; the loss per share was $0.09, better than the market expectation of a loss of $0.24 per share; Adjusted EBITDA was $3.5 billion, a year-on-year increase of 191%. Despite the company's second-quarter performance exceeding expectations in revenue, loss control, and Starlink user growth, investors were more concerned about SpaceX's rapidly rising capital expenditures. SpaceX's capital expenditures in the second quarter reached $18.369 billion, approximately 6.5 times the $2.825 billion from the same period last year; of this, $15.828 billion was allocated to AI computing infrastructure, accounting for over 80% of total capital expenditures. In the first investor call following the earnings report, SpaceX CEO Elon Musk once again set aggressive targets— the company expects to achieve an annualized revenue run rate (ARR) of over $100 billion by December 2026 and has moved its $1 trillion annual revenue target from 2031 to 2030. He also stated that SpaceX plans to launch AI computing satellites starting in 2027 to send data centers into space. However, for SpaceX, which has seen its market value evaporate by over $1 trillion from its peak, stocks worth over $100 billion will be unlocked for the first time later this week, which may put further downward pressure on the stock price. As of the time of writing, SpaceX's stock fell over 11% in pre-market trading on Wednesday.

AMD (AMD.US) revenue surged 50%, and data center business doubled, but the stock was sold off due to growth expectations not "stunning" the market. Data shows that AMD achieved revenue of $11.54 billion in the second quarter, a year-on-year increase of 50%, exceeding the average analyst expectation of $11.28 billion; net profit was $2.3 billion, significantly up from $872 million in the same period last year; adjusted earnings per share were $1.66, also better than the market expectation of $1.62. The core driver of this performance surge came from the data center business. Sales in this segment soared 107% year-on-year to $6.72 billion, surpassing the analyst expectation of $6.48 billion. AMD attributed this to strong sales of central processing units (CPUs) and graphics processing units (GPUs). One of the biggest highlights of this earnings report is that AMD's first rack-level AI system, "Helios," is about to begin delivery. The company expects Helios shipments to gradually increase in the fourth quarter, with initial customers including Meta, OpenAI, and Oracle, marking AMD's competitive entry into the "full system" showdown in the AI infrastructure field. However, AMD's guidance for third-quarter revenue was only slightly above consensus, far from the "super explosion" some investors hoped for— the company expects third-quarter revenue of about $13 billion (with a fluctuation of $300 million), although significantly higher than the average analyst expectation of $12.52 billion, some Wall Street estimates were already far exceeding $13 billion, with the highest reaching $14 billion. As of the time of writing, AMD's stock fell over 8% in pre-market trading on Wednesday.

Outstanding performance and welcoming policy dividends! Astera Labs (ALAB.US) Q3 guidance greatly exceeded expectations, and potential optical module bans completely opened up stock price imagination. The earnings report shows that the company achieved revenue of $392.4 million in the second quarter, a year-on-year increase of 104.5%, exceeding expectations by $31.59 million; The adjusted earnings per share are $0.80, exceeding expectations by $0.11. Astera Labs expects third-quarter revenue to be between $540 million and $560 million, significantly higher than the previous expectation of $417 million; the adjusted earnings per share are expected to be between $1.16 and $1.21, also well above the previous expectation of $0.81. Astera Labs is currently driven by strong demand signals in the high-performance computing and AI infrastructure sectors, showing an upward momentum. As hyperscale cloud service providers continue to expand their data center capabilities to accommodate next-generation large language models, the demand for advanced connectivity solutions has surged. Additionally, the latest restrictions proposed by the Federal Communications Commission (FCC) in the U.S. to ban the import of new foreign optical modules position Astera Labs favorably overall in terms of business structure and supply chain dynamics, especially in short-distance copper interconnect replacements, the reshaping of North American compliant supply chains, and the evolution of next-generation silicon photonic/optical interconnects. As of the time of writing, Astera Labs' stock fell over 1% in pre-market trading on Wednesday.

Data centers are igniting a "high-speed connectivity revolution"! Arista (ANET.US) revenue surged 38%, strong performance outlook validates the AI Ethernet supercycle. The financial report shows that the company's second-quarter revenue grew 38% year-on-year to $3.04 billion, better than the market expectation of $2.82 billion; adjusted earnings per share were $1.02, exceeding the market expectation of $0.88. The company expects third-quarter revenue to be $3.3 billion, higher than the market expectation of $2.94 billion; the adjusted earnings per share for the third quarter are expected to be between $1.06 and $1.08, also above the market expectation of $0.91. Furthermore, the company's management conveyed several key signals during the earnings call—there is no doubt about demand, and the real constraint on revenue realization is the supply chain. Arista Networks focuses on producing high-speed computer networking equipment that supports large AI data centers, with core customers including Microsoft and Amazon. The second-quarter performance and third-quarter guidance highlight that, against the backdrop of the global enterprise AI computing infrastructure construction wave, the demand for its high-performance networking equipment will continue to expand strongly. As of the time of writing, Arista's stock rose over 12% in pre-market trading on Wednesday.

Novo Nordisk (NVO.US) Q2 performance exceeds expectations, raises full-year guidance but concerns remain! Wegovy oral drug sales are weak, and the path to growth is still overshadowed. The financial report shows that, at fixed exchange rates, Novo Nordisk's second-quarter adjusted sales increased by 7% year-on-year to 78.488 billion Danish kroner, and adjusted operating profit increased by 11% year-on-year to 33.389 billion Danish kroner, both better than market expectations. The highly anticipated Wegovy oral drug had second-quarter sales of 3.22 billion Danish kroner, slightly below the market expectation of 3.27 billion Danish kroner. The rapid growth of the Wegovy oral drug in its early launch phase had led investors to expect explosive growth. However, the latest results have raised concerns in the market about the company's long-term competitiveness. Looking ahead, Novo Nordisk has raised its full-year performance expectations for 2026 Currently, it is expected that adjusted sales and operating profit will decline by 6% to flat when calculated at fixed exchange rates, an improvement from the previous guidance of a decline of 4% to 12% for both indicators. However, the better-than-expected second-quarter performance and the upward revision of the full-year guidance have not resolved Wall Street's biggest concern—whether this Danish pharmaceutical giant can find a clear path back to sustainable growth amid increasing competition in the weight-loss drug market. As of the time of writing, Novo Nordisk rose over 2% in pre-market trading on Wednesday.

Demand for weight-loss drugs continues to rise, Eli Lilly (LLY.US) Q2 performance greatly exceeds expectations, raises full-year revenue guidance. The financial report shows that Eli Lilly's Q2 revenue grew by 48% year-on-year to $22.97 billion, far exceeding the market expectation of $20.59 billion; adjusted earnings per share were $8.38, significantly higher than the market expectation of $6.31. The core driver of Eli Lilly's growth continues to come from its GLP-1 drug portfolio. In Q2, diabetes drug Mounjaro and weight-loss drug Zepbound together contributed nearly $15 billion in revenue, becoming the main source of the company's performance growth. Among them, Mounjaro's global sales reached $9.9 billion, a year-on-year increase of 91%. In the first half of this year, the cumulative revenue of this product has exceeded $18.6 billion, a year-on-year increase of 106%, and the full-year sales exceeding $30 billion has almost become a market consensus. While the GLP-1 business is growing rapidly, Eli Lilly is also expanding future growth sources through acquisitions. Additionally, Eli Lilly raised its full-year guidance for 2026, increasing the revenue guidance from $82 billion-$85 billion to $85 billion-$87 billion; the profit margin guidance was raised from 47.0%-48.5% to 49.0%-50.5%. As of the time of writing, Eli Lilly rose nearly 5% in pre-market trading on Wednesday.

Motorcycle "cash cow" offsets weak automotive business! Honda (HMC.US) leverages weak yen to exceed expectations: Q1 net profit surges 129%, raises FY2027 guidance. The financial report shows that Honda's first fiscal quarter operating revenue reached 6.06 trillion yen, a year-on-year increase of 13.5%, exceeding the market expectation of 5.87 trillion yen; operating profit surged 117.4% year-on-year to 530.77 billion yen, far exceeding the market expectation of 300.16 billion yen. This is the first time in six quarters that Honda has achieved year-on-year profit growth in a quarter. The motorcycle business is the largest profit engine this quarter—this segment contributed about 234 billion yen in operating profit, accounting for nearly half of the total quarterly operating profit of 530.8 billion yen. With the strong support of this "cash cow," Honda was able to buffer the huge financial impact brought by the restructuring of its automotive business. Meanwhile, the automotive business achieved an operating profit of 192.1 billion yen this quarter, significantly turning around from a loss of 29.6 billion yen in the same period last year. The depreciation of the yen is one of the key factors driving the improvement in automotive business profits. Honda raised its full-year operating profit forecast to 650 billion yen and its full-year revenue forecast to 24.15 trillion yen (above analyst expectations), with net profit significantly raised from 260 billion yen to 400 billion yen. As of the time of writing, Honda rose over 4% in pre-market trading on Wednesday Disney (DIS.US) Q3 performance mixed, entertainment division operating profit surges 64%. The financial report shows that Disney's revenue for the third fiscal quarter increased by 7% year-on-year to $25.248 billion, falling short of the market expectation of $25.41 billion; adjusted earnings per share were $2.06, better than the market expectation of $1.86; the operating profit margin reached 22%, significantly up from 15.7% in the same period last year; free cash flow profit margin improved from 8% in the same period last year to 12.2%, highlighting the effectiveness of cost optimization. The core experience business segment, including theme parks and cruise operations, saw operating profit increase by 20% year-on-year to $3.02 billion, alleviating investors' previous concerns about the potential disruption to the tourism industry due to the Middle East conflict. The entertainment division's operating profit soared 64% to $1.68 billion. The company stated that this was mainly driven by blockbuster films including "Toy Story 5" and "The Devil Wears Prada 2." Overall, Disney presented a pattern of "weak revenue, strong profit" this quarter, with cost reduction and efficiency improvement leading to a significant enhancement in profit margins, but revenue growth pressure remains a core risk, and the sustainability of long-term growth awaits verification from subsequent financial reports. As of the time of publication, Disney's stock rose nearly 3% in pre-market trading on Wednesday.

Important economic data and event forecasts

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

Beijing time the next day 04:05 Federal Reserve Governor Lisa Cook speaks on economic outlook

Earnings forecasts

Thursday morning: Western Digital (WDC.US), Applovin (APP.US), Occidental Petroleum (OXY.US)

Thursday pre-market: ConocoPhillips (COP.US), Zai Lab (ZLAB.US)