U.S. Stock Market Outlook | Three Major Index Futures Rise Together, Gold Price Surpasses $4,300, U.S. July Non-Farm Payrolls Coming Soon

Pre-Market Market Trends

1. As of August 7 (Friday), U.S. stock index futures are all up before the market opens. As of the time of writing, Dow futures are up 0.15%, S&P 500 futures are up 0.27%, and Nasdaq futures are up 0.59%.

1. As of the time of writing, the German DAX index is up 0.77%, the UK FTSE 100 index is up 0.71%, the French CAC 40 index is up 0.44%, and the Euro Stoxx 50 index is up 0.67%.

1. As of the time of writing, WTI crude oil is down 0.78%, priced at $76.69 per barrel. Brent crude oil is down 0.82%, priced at $81.81 per barrel.

Market News

The U.S. July Non-Farm Payroll Report is Coming! The market currently expects that the U.S. added only 83,000 non-farm jobs in July, up from 57,000 in June; the unemployment rate remains unchanged at 4.2%. In addition, the market expects that the average hourly wage in the U.S. will increase by 0.3% month-on-month and 3.5% year-on-year in July, which theoretically matches the Federal Reserve's 2% inflation target. The U.S. job market is still showing a "low hiring, low layoffs" pattern—companies are not hiring much and there are no large-scale layoffs. For the U.S. stock market, which has recently experienced significant volatility (especially in tech stocks), a more comfortable outcome tonight might be a "neither hot nor cold" number—employment does not stall, and wages do not reignite inflationary pressures; the market can continue to trade on a soft landing without having to significantly raise interest rate expectations again. However, if non-farm employment significantly exceeds expectations, the probability of a rate hike in September may quickly rise, putting high-valuation tech stocks under interest rate pressure; if the data suddenly stalls, the trading logic may shift from "rate hikes cooling" to "economic slowdown."

Federal Reserve's Musalem: Beware of High Inflation Becoming Entrenched, Monetary Policy Must Maintain Substantial Restraint. St. Louis Fed President Musalem stated that with inflation rates above the Federal Reserve's 2% target, policymakers cannot afford to endure higher inflation while waiting for the possibility of strong productivity growth. Musalem does not have a vote on policy decisions this year; he expressed a preference for a 25 basis point rate hike at the last Federal Reserve policy meeting last week. He stated, "The key is that monetary policy must effectively restrain real inflation, rather than endure slightly higher inflation today in pursuit of tomorrow's productivity growth." "The central bank's most important contribution to long-term economic growth is to provide a backdrop of price stability, allowing businesses to plan investments and innovations that drive economic growth." "Record-breaking" US earnings season: S&P 500 constituent stocks' EPS growth of 45%, but half comes from investment income, and one-third from AI infrastructure. Despite being dubbed a "record-breaking" earnings season, structural issues behind the numbers are raising alarms. According to the latest internal report from Goldman Sachs' sales and trading department, the year-on-year EPS growth rate for S&P 500 constituent stocks in the second quarter reached 45%—but if we exclude the fair value changes in equity investments held by large tech companies, this figure nearly halves to 26%. In other words, about half of the "record-breaking" profit growth comes from tech giants' revaluation of their venture capital portfolios, rather than substantial expansion of operating profits. Meanwhile, stocks related to AI infrastructure contributed approximately one-third of the overall EPS growth for the S&P 500, further highlighting the high concentration of profit growth. For investors holding the index, this means that the earnings foundation on which current valuations rely is far more fragile than the surface numbers suggest.

Bank of America derivatives department warns: Market volatility has become the norm, AI bubble risk indicators nearing internet era extremes. The latest report from Bank of America's derivatives team points out that as the AI bubble continues to accumulate, market volatility and uncertainty are rising simultaneously at both macro and micro levels, with several key indicators nearing or approaching historical extremes from the 2000 internet bubble burst. More concerning is the trend of diversification in stock returns. In the current market structure characterized by low correlation and frequent sector rotation, even within the tech sector, the divergence in individual stock performance continues to widen. Bank of America's data shows that the degree of divergence among S&P 500 constituent stocks is approaching historical highs seen during the internet bubble. Bank of America had previously warned that as the AI bubble accumulates, the degree of divergence among US stock constituents is likely to break records set during the internet bubble. After all, today's tech giants have much larger market capitalizations and more volatile stock prices, exerting far greater influence over the market than in the past.

Spot gold surpasses $4,300! UBS: Gold prices expected to return to $5,000 in the first half of next year. As of the time of writing, spot gold has risen nearly 2%, trading at $4,318 per ounce. The rapid rise in gold prices this round is primarily due to a recent decrease in geopolitical risks, followed by a weakening of expectations for Federal Reserve interest rate hikes, which has boosted the dollar index and supported gold prices. As gold prices rebound strongly after several months of stagnation, UBS is looking further ahead—expecting gold prices to return to $5,000 in the first half of 2027. UBS believes that the structural driving factors supporting gold prices remain solid in the medium to long term. The bank stated that short-term trading risks should be distinguished from long-term investment logic, and that a phase where gold prices fall to $4,000 or below should be viewed as an opportunity to establish strategic positions.

Agreement on the passage through the Strait of Hormuz may be announced in a few days. On August 6 local time, sources revealed that Iran and Oman have reached an understanding on the outline of an agreement to reopen the Strait of Hormuz. According to the relevant arrangements, the strait will be open for 60 days, during which ships will enter the Persian Gulf via the route closer to Iran and exit via the route closer to Oman. Past vessels will not be charged transit or service fees, and regional parties can participate in technical work such as mine clearance The source also stated that this agreement still requires approval from Iran's Supreme National Security Council and may be announced within a few days. Once the agreement is approved, the United States and Iran will resume the implementation of the previously reached memorandum of understanding.

Individual Stock News

U.S. optical communication stocks rise before the market opens. As of the time of writing on Friday, Applied Optoelectronics (AAOI.US) rose over 13%, Coherent (COHR.US) rose over 6%, Lumentum (LITE.US) and Corning (GLW.US) rose over 4%, while Marvell Technology (MRVL.US), Astera Labs (ALAB.US), and Credo Technology (CRDO.US) rose nearly 3%. In terms of news, Applied Optoelectronics reported a staggering 86% year-on-year increase in revenue for the second quarter to $192 million, with data center business revenue surpassing $100 million for the first time, and 800G product revenue doubling quarter-on-quarter. More importantly, the 1.6T product is about to complete customer certification and start shipping. The management's mid-path projection for 2027 indicates that monthly revenue from data center transceivers could reach $471 million.

Holding hundreds of billions in cash but stingy with returns? Analysts publicly pressure, SK Hynix (SKHY.US) plans to finalize shareholder return plan in Q3. South Korean chip giant SK Hynix announced on Friday that it will distribute a dividend of 375 Korean won per share. The company also stated that it is actively evaluating further measures to enhance shareholder value, with specific details to be finalized and announced in the third quarter. Brokers estimate that SK Hynix's free cash flow this year is expected to reach approximately 100 trillion Korean won. Although the company plans to use 50% of its free cash flow for shareholder returns, this ratio is lower than the 100% proposed by its peer Micron Technology. The stark difference has led to dissatisfaction among many investors. Analysts believe that this contrast of high performance growth and restrained dividends has led the market to speculate that management does not have confidence in the long-term sustainability of the current AI storage boom.

AI-driven demand for network services accelerates, cybersecurity company Cloudflare (NET.US) raises full-year profit forecast. Cybersecurity company Cloudflare's profit forecast for this year exceeded Wall Street's estimates, indicating that demand for network services continues to accelerate in the context of rapid AI adoption. The financial report showed that the company's second-quarter revenue reached $696.1 million, a year-on-year increase of 35.9%, exceeding expectations by $29.75 million; adjusted earnings per share were $0.29, surpassing expectations by $0.02. Cloudflare stated that it now expects adjusted earnings per share for the full year to be between $1.25 and $1.26, up from the previous forecast of $1.19 to $1.20. The average analyst expectation was $1.20. As of the time of writing, Cloudflare's stock rose over 16% before the market opened on Friday.

Roku (ROKU.US) sees explosive growth! Q2 net profit skyrockets over 15 times, with advertising and subscriptions both increasing over 25%. The financial report showed that Roku's second-quarter revenue grew by 22% year-on-year to $1.35 billion, exceeding the market expectation of $1.3 billion; Net profit reached a record $164.2 million, more than 15 times the $10.5 million from the same period last year; diluted earnings per share were $1.08, double market expectations. After years of losses, this marks Roku's fifth consecutive quarter of net profit. Roku's free cash flow over the past 12 months reached $704 million, also a historic high. The company's advertising revenue in the second quarter grew 25% year-on-year to $673 million, while subscription revenue increased 26% year-on-year to $548 million. This earnings report is the first released by the company since Fox announced its acquisition of Roku for $22 billion in mid-June. The deal is expected to close in the first half of 2027.

Global tourism boom + World Cup dual engines, Airbnb (ABNB.US) delivers "strongest" performance in recent years, AI strategy upgrade becomes the next ace. Thanks to the continued warming of global tourism, Airbnb, the giant in short-term rentals and experiences, has delivered an impressive performance. The company achieved revenue of $3.61 billion in the second quarter, up from $3.1 billion in the same period last year, and also exceeding market expectations of $3.57 billion; earnings per share reached $1.37, significantly up from $1.03 a year ago. Based on strong travel demand worldwide, Airbnb has raised its full-year revenue growth forecast for 2026—now expecting annual revenue growth to reach "at least the mid-teens percentage," further optimizing from the "low to mid-teens" guidance given in May, and significantly higher than analysts' previous average expectation of 14% growth. Additionally, the company stated that artificial intelligence (AI) will be a key focus for experience upgrades in the next phase. As of the time of writing, Airbnb's stock rose over 7% in pre-market trading on Friday.

Atlassian (TEAM.US) revenue surges 28%, record orders and millions of monthly active users ignite stock price. Atlassian dispelled the "AI replacement" shadow hanging over the collaboration software developer with an impressive earnings report. For the fourth quarter of fiscal year 2026 ending June 30, the company's adjusted earnings per share reached $1.87, significantly exceeding market expectations of $1.50; total revenue surged 28% year-on-year to $1.77 billion, well above market expectations of $1.66 billion. The core driver of this impressive earnings report was the cloud transformation. Cloud business revenue for the quarter reached $1.21 billion, with year-on-year growth accelerating to 31%, becoming the strongest driver of overall revenue growth. By the end of the quarter, annual recurring revenue (ARR) from subscriptions grew 23% to $6.61 billion; as a measure of future revenue, remaining performance obligations (RPO) surged 44% year-on-year to $4.82 billion. As of the time of writing, Atlassian's stock soared nearly 27% in pre-market trading on Friday.

Important Economic Data and Event Forecasts

Beijing time 20:30 U.S. July Non-Farm Payroll Report

Beijing time 22:00 2027 FOMC voting member, Richmond Fed President Barkin speaks

Beijing time 23:00 U.S. July New York Fed 1-year inflation expectations