U.S. Stock Market Outlook | The three major stock index futures are mixed, Moderna surges in pre-market, and the Federal Reserve's July meeting minutes along with the 20-year Treasury auction are set to be released tonight

Pre-Market Market Trends

1. As of August 19 (Wednesday), U.S. stock index futures showed mixed results before the market opened. As of the time of writing, Dow futures were up 0.13%, S&P 500 futures were up 0.05%, and Nasdaq futures were down 0.21%.

1. As of the time of writing, Germany's DAX index was down 0.21%, the UK's FTSE 100 index was down 0.01%, France's CAC 40 index was up 0.37%, and the Euro Stoxx 50 index was up 0.08%.

1. As of the time of writing, WTI crude oil was up 0.71%, priced at $84.66 per barrel. Brent crude oil was up 0.63%, priced at $91.59 per barrel.

Market News

What Waller didn't say, the Fed meeting minutes will make up for tonight! At 2 AM Beijing time on Thursday, the Federal Reserve will release the minutes from the July meeting. Traders are eager to find more clues in the document to gauge the central bank's true views on future interest rate paths and inflation risks. The importance of this meeting's minutes is higher than usual, as the Fed has recently reduced its public policy guidance. At the July meeting, the Fed maintained the federal funds rate target range at 3.5% to 3.75% for the fifth consecutive time, but three of the 12 voting members expressed dissent, supporting a rate hike. Fed Chair Waller's remarks at the press conference were brief and did not provide detailed explanations on how the committee weighed inflation, economic growth, and future policy risks. This has made the market more reliant on the meeting minutes to understand policy discussions that were not disclosed in public statements. The market is particularly focused on whether a clearer inclination towards rate hikes is forming within the monetary policy committee. If the minutes signal a stronger hawkish stance, U.S. Treasury yields may rise further, the dollar may gain support, and interest rate-sensitive stocks may come under pressure; if the minutes show that significant divisions still exist within the committee, stock sectors that have recently been pressured by rising financing costs may see some relief.

$16 billion 20-year Treasury auction is coming, will yields hit new highs? On Wednesday local time, the U.S. Treasury will issue $20 billion in 20-year Treasury bonds, of which about $16 billion will be new debt issued to investors. As long-term U.S. Treasury yields have been rising recently, this auction is becoming an important window for the market to observe investors' views on the U.S. fiscal situation and the capacity to absorb debt supply. As of the time of writing, the yield on 20-year Treasury bonds was 5.266%. The core question of concern in the market is: as the U.S. government's borrowing needs continue to expand, how high of an interest rate will be needed in the future to continue attracting global funds to purchase U.S. Treasury bonds? In the past week, the U.S. Treasury market has released similar signals. The yield on the 10-year U.S. Treasury bond auction reached 4.683%, the highest level in 19 years; the yield on the 30-year Treasury bond auction reached 5.216%, the highest level in 25 years. The continuous rise in long-term bond yields indicates that investors are demanding higher returns to compensate for the uncertainties brought about by the expansion of the U.S. fiscal deficit, rising debt, and future inflation risks.

JP Morgan Asset Management warns: AI concentration risk spreads to the bond market, investors need to be wary of "crowded trades." Gabriela Santos, a strategist at JP Morgan Asset Management, warned that the concentration risk of "AI factors" has spread from the stock market to the fixed income sector. Although the "super cycle" narrative still holds, the necessity for investors to act cautiously is rising sharply. Santos stated, "You can be highly bullish on everything related to AI, but you still need to think very carefully about portfolio construction." Santos's warning about concentration extends to bond portfolios. She noted that the issuance of investment-grade bonds has reached a historical high for the fourth consecutive month, with companies including Google even issuing 100-year bonds. Additionally, multi-asset investors are now facing risk exposure from AI expansion on both the equity and fixed income sides.

BTIG: "When the music stops, the game of musical chairs in the U.S. stock market could end at any time." The U.S. stock market is experiencing an unprecedented structural split. Price movements are continuously diverging from market breadth, with funds rotating between different factors in a completely irregular manner. Once the "musical chairs game" music stops, investors will face a long-awaited comprehensive high-correlation sell-off. Market breadth is one of the core indicators of market health. BTIG technical strategist Jonathan Krinsky released a report on Wednesday, noting that as of now, there have been 57 trading days in 2026 where price movements were contrary to market breadth, tying with the past two years for the most in nearly 30 years—yet it is only mid-August, and this record is bound to be further broken this year. Krinsky warned, "We are closer to that day than many people expect"—when there are no more "chairs" left in the market, investors will be forced to turn to cash, triggering a comprehensive synchronized sell-off that has not been seen for ten months.

Long-term U.S. Treasury yields remain high, but interest rate options have turned: rate cut trades are coming. With a series of recent weak U.S. economic data, bond traders are quickly adjusting their judgments on the Federal Reserve's policy path. Although long-term U.S. Treasury yields remain at multi-year highs, the flow of funds in the interest rate options market has begun to shift towards betting that the Federal Reserve will cut rates in 2027 to hedge against the risks of economic slowdown. This change began with a series of economic data released last week. The data showed that U.S. inflation and consumer demand both slowed in July. The subsequent non-farm payroll report indicated that the U.S. economy unexpectedly lost 23,000 jobs in July; retail sales recorded the largest decline in over a year, and consumer confidence also weakened simultaneously. As a result, market expectations for a rate hike at the Federal Reserve's meeting on September 16 have significantly decreased. Options traders have begun to establish new positions, betting that the rate hike magnitude reflected in the swap market over the coming months will be revised, with some investors even starting to hedge for a rate cut before mid-2027 Legendary Investor Bets on U.S. Recession Next Year: Rising Inflation May Burst U.S. Stock Valuations. Billionaire investor, Omega Advisors CEO and former Goldman Sachs CEO Leon Cooperman has once again issued a warning about the U.S. economy and stock market this week. He predicts that the U.S. economy may enter a recession within the next year, which could drag down the stock market. Cooperman noted that the current market bears similarities to historical boom-bust cycles, including the collapse of the "Nifty Fifty" stocks in the early 1970s. He believes that the market's optimism regarding AI investments may also begin to cool, stating, "I think we will see a recession at some point next year, which could lead to a market decline." Cooperman also believes that investors are overlooking the risks of rising inflation, which could similarly impact stock valuations. Cooperman's views currently diverge significantly from the mainstream judgments on Wall Street. Most market forecasters remain optimistic about AI demand and the returns on related investments, with the NASDAQ 100 index having risen 19% so far this year, poised to achieve double-digit gains for the second consecutive year.

Individual Stock News

SK Hynix (SKHY.US) Rises Pre-Market, Plans to Repurchase and Cancel 40 Trillion Won in Stock. SK Hynix announced on Wednesday that it will repurchase and cancel stock worth 40 trillion won (approximately $28.61 billion). The company stated that the stock repurchase will begin on August 20 and last for about three months, with all purchased shares being canceled upon completion of the repurchase. This stock repurchase and cancellation plan, amounting to 40 trillion won, is the largest of its kind in the history of South Korean listed companies. Additionally, SK Hynix has made it clear that it will increase shareholder returns from the previous "within 50% of cumulative free cash flow" to "over 50%." The methods of shareholder return will include a combination of stock repurchases and cash dividends, and the company also plans to explore expanding its dividend policy, including fixed dividends and special dividends. As of the time of publication, SK Hynix's stock had risen over 3% in pre-market trading on Wednesday.

Moderna (MRNA.US) Soars Pre-Market After Successful Phase III Trial of mRNA Melanoma Vaccine. Moderna and Merck (MRK.US) announced on Wednesday that their collaboration on the mRNA personalized cancer vaccine, intismeran autogene, has achieved preliminary positive results in its first Phase III clinical trial. This marks the first successful Phase III trial of mRNA technology in the field of cancer treatment and represents a significant breakthrough in personalized immunotherapy in cancer treatment history. According to a joint statement from the two companies, the INTerpath-001 Phase III trial met its primary endpoint and key secondary endpoints—showing that the vaccine combined with Merck's immunotherapy drug Keytruda significantly reduces the risk of postoperative recurrence in melanoma patients and effectively inhibits tumor spread to distant organs compared to Keytruda alone. This is the first clinical regimen to demonstrate efficacy superior to Keytruda monotherapy in adjuvant treatment of melanoma, with Keytruda previously being the standard treatment option for this indication. Moderna CEO Stéphane Bancel stated that the product could be approved for market as early as 2027, depending on the regulatory review process. He referred to this result as "an extraordinary milestone in mRNA science." As of the time of writing, Moderna surged over 95% in pre-market trading on Wednesday, while Merck rose over 8%.

Google (GOOGL.US) raises $3.9 billion through its first Australian dollar bond issuance, adding another entry to the global tech financing wave. The American tech giant Google successfully raised AUD 5.5 billion (approximately USD 3.89 billion) through its inaugural Australian dollar bond issuance, contributing to the ongoing wave of financing among global tech companies. The terms list shows that Google’s issuance includes four varieties with maturities of 3 years, 5 years, 10 years, and 20 years, with the longest 20-year bond carrying a coupon rate of 6.9%. This marks Google’s first entry into the Australian dollar bond market, with long-term bond financing costs nearing 7%, potentially setting a record for the highest coupon rate in the company's history. This bond issuance follows Google’s completion of a USD 25 billion bond issuance earlier this month. Global tech companies are increasingly turning to capital markets to raise funds for their massive AI investments, whereas they previously relied on their cash reserves for investments.

Target (TGT.US) Q2 results exceed expectations, raises full-year guidance. The financial report shows that Target's total net sales for Q2 were USD 26.54 billion, better than the market expectation of USD 26.14 billion; net sales grew 5.3% year-on-year to USD 25.95 billion; same-store sales increased by 3.8% (mainly driven by a 3.6% increase in foot traffic). Adjusted earnings per share were USD 2.46, exceeding the market expectation of USD 2.33. Based on better-than-expected performance in the first half of the year, Target raised its full-year guidance for fiscal 2026: it expects net sales to grow by about 5% (previous guidance was 1 percentage point higher); operating profit margin is expected to reach around 6% (including about 90 basis points contribution from tariff refunds). GAAP and adjusted EPS expectations were raised to between USD 9.90 and USD 10.90.

Lowe's (LOW.US) Q2 results mixed, full-year guidance below expectations. The financial report shows that Lowe's Q2 sales grew 8% year-on-year to USD 26 billion, below the market expectation of USD 26.1 billion; adjusted earnings per share were USD 4.40, better than the market expectation of USD 4.22. Additionally, the company stated that it expects full-year earnings and revenue to fall within the lower end of the previously provided forecast range. The company currently expects revenue for the fiscal year ending January 2027 to be USD 92 billion and adjusted earnings per share to be USD 12.25, below market expectations of USD 92.9 billion and USD 12.43, respectively. This performance further exacerbates the pressure on Lowe's stock price. The U.S. housing market is recovering, but high prices have already put pressure on home renovation spending for 2026. As of the time of writing, Lowe's fell over 3% in pre-market trading on Wednesday.

Keysight Technologies (KEYS.US) Q3 financial report and guidance both exceed expectations: AI data center demand drives a 56% year-on-year surge in orders. Benefiting from the rapid expansion of AI data centers, which has driven demand for its software and testing tools, electronic design, simulation, and testing equipment supplier Keysight Technologies reported adjusted earnings per share and revenue for the third fiscal quarter that both exceeded market expectations, and raised its guidance for the fourth fiscal quarter and the full year. The financial report shows that the company achieved revenue of USD 1.85 billion in the third fiscal quarter, a year-on-year increase of 36.5%, surpassing analysts' expectations of USD 1.75 billion; The adjusted earnings per share were $3.07, far exceeding the expected $2.48. In the third quarter, the order amount reached $2.09 billion, a year-on-year increase of 56%, with core orders growing by 52%, also significantly surpassing the market expectation of $1.86 billion. Looking ahead, the company expects adjusted earnings per share in the fourth quarter to be between $3.34 and $3.40, with revenue between $1.93 billion and $1.95 billion, with midpoints of $3.37 (approximately 76% year-on-year growth) and $1.94 billion (approximately 37% year-on-year growth), which is well above the market expectations of $2.68 and $1.83 billion.

Important Economic Data and Event Forecast

At 02:00 Beijing time the next day, the Federal Reserve will release the minutes of the monetary policy meeting.

Earnings Forecast

Thursday pre-market: Walmart (WMT.US), Alibaba (BABA.US), NetEase (NTES.US), Youdao (DAO.US), Futu (FUTU.US), Autohome (ATHM.US), Daqo New Energy (DQ.US), BridgeBio Pharma (NBP.US)