US stock outlook | Futures of the three major stock indexes soared, and most technology stocks followed a “wait-and-see model” on the eve of high-tech giants' earnings reports, US stocks switched to a “wait-and-see model”

Pre-market market trends

1. On July 21 (Tuesday), the futures of the three major US stock indexes rose sharply before the US stock market. As of press release, Dow futures were up 0.28%, S&P 500 futures were up 0.49%, and NASDAQ futures were up 1.42%.

2. As of press release, the German DAX index rose 0.13%, the UK FTSE 100 index rose 0.16%, the French CAC40 index rose 0.06%, and the European Stoxx 50 index rose 0.52%.

3. As of press release, WTI crude oil rose 1.13% to $83.41 per barrel. Brent crude rose 1.19% to $90.28 per barrel.

Market news

The night before the tech giants' earnings report: US stocks have switched to a “wait-and-see model”, and oil prices and AI are yet to be dismantled. As global investors wait with bated breath for earnings reports from tech giants, the US stock market is facing the double impact of geopolitical risks and AI valuations. Analyst Damir Tokic pointed out that the market is currently dominated by two major themes — the impact of inflation driven by oil prices and artificial intelligence (AI) trading, and technology stocks continue to be in a cautious “wait-and-see mode” until key earnings are released. Tokic said, “Currently, the tech sector is on the sidelines, while the rest of the sector is being sold off. “Under the double pressure of rising oil prices and the proximity of technology earnings reports, the downside risks faced by the S&P 500 index cannot be ignored.” Google's second-quarter earnings report released after the US stock market on Wednesday will be a key weather vane for AI trading. Tokic pointed out that any sign of AI capital spending stagnation could accelerate what he called the “bursting of the AI bubble” — an expectation that has already been priced in semiconductor stocks.

Xiaomo CEO Dimon “threw cold water”: Investors underestimate global risks and will never buy US stocks and long-term bonds at current prices. J.P. Morgan CEO Jamie Dimon said that investors have underestimated the risks facing the global economy. At the current price level, he will neither buy stocks nor long-term US Treasury bonds. Dimon said the market did not fully reflect the growing geopolitical and fiscal threats. When asked if the market is underestimating the possibility of a major shock, Dimon said that it is difficult to know exactly what risks are already reflected in asset prices. He said, “Some factors may have already been digested, but what actually happens cannot be digested ahead of time.” In addition to US debt, Dimon is also cautious about stocks. Although if an individual stock were “a great investment,” Dimon said he wouldn't buy the market at the current valuation level.

UBS trading department: The momentum stock sell-off is nearing its end, and the time has come to gradually open positions on AI and semiconductors. According to data from UBS's main broker business, hedge funds have reduced their long positions in momentum stocks and semiconductor stocks by about 5% of the total market value. This decline is one of the biggest records in history. Currently, net positions in semiconductor and software stocks have fallen back to the level of April this year. Michael Romano, head of stock derivatives sales at UBS hedge funds, said in a report to clients that despite the recent correction, fundamentals in the AI field are still improving, which provides a basis for “buying on dips.” However, he recommended that investors gradually open positions in batches rather than rushing in all at once. Momentum strategies usually refer to the operation of buying strong stocks and shorting weak stocks at the same time. He expects the momentum stock deleveraging process to bottom out by the end of July — even if it hasn't bottomed out yet, it is close to a low point.

The delivery period broke through 19 weeks, and the price recorded the biggest monthly increase. “Chip inflation” may become the next “life and death” for AI trading? Recently, investment agency Susquehanna said in a recent report that the delivery cycle of the global semiconductor industry was further lengthened in June, and even in the context of rising prices, this trend is still very significant. The bank's analyst Christopher Rolland pointed out that the semiconductor industry's delivery time in June recorded the biggest monthly increase since the current cycle, increasing by 5 days to 19.4 weeks from month to month. What is more remarkable is that industry pricing experienced the “biggest monthly increase” in June, an increase of 5% over the previous month. Accelerated deliveries coincided with rising prices, highlighting that the chip supply and demand pattern continues to tighten. Behind the recent sharp fluctuations in chip stock prices, the acceleration of delivery and the rise in prices seem to mean that a deeper structural contradiction is surfacing — “chipflation” (Chipflation). Julia Hermann, a global market strategist at New York Life Insurance Investment Management, recently warned that “chip inflation” — that is, soaring prices of AI-related logic chips and memory chips — will be the next headwind to test the resilience of AI transactions. In her view, the sharp rise in chip prices is certainly a sign of strong demand, but it is also a double-edged sword — continued high prices will drastically drive up the construction costs of AI infrastructure, which in turn may curb or even end the current AI capital expenditure boom.

HSBC strategists warn: US stocks may face the risk of a correction before the midterm elections, and investors should reduce their positions appropriately after the earnings season ends. Max Kettner, chief multi-asset strategist at HSBC Holdings, said that stock investors should consider reducing some positions appropriately after the end of the current earnings season. He warned that overheated market sentiment, weakening fiscal stimulus effects, and uncertainty brought about by the US midterm elections could all trigger a correction in the stock market. Kettner, who has maintained the “biggest overallocation” view of stocks since mid-March, said that current market positions and investor sentiment are close to the level of the 2021 economic restart period, while some US credit card consumption data already shows that consumer spending has begun to slow down. He pointed out that the scale of fiscal stimulus brought about by the “Beautiful Big Act” is comparable to the stimulus measures during the 2009 financial crisis, but the relevant stimulus effects are mainly concentrated in the first half of 2026, which means that additional financial support will be very limited in the future. In an interview, Kettner said, “I think before the midterm elections, that is, after the end of the earnings season in about a month to a month and a half, it may be time to relax the throttle a little bit and reduce stock positions appropriately.”

Goldman Sachs issued an extreme oil price warning: if the “global oil supply” continues to be blocked, Q4 oil may break another $120. Goldman Sachs issued a major report warning that if shipping disruptions in the Strait of Hormuz continue, the price of Brent crude oil may break through $120 per barrel in the fourth quarter of 2026. Goldman Sachs has outlined two very different paths for the crude oil market. Goldman Sachs also pointed out that the risks faced in the forecast were “biased upward” because shipping was blocked in the Strait of Hormuz and the Red Sea route was also threatened. The bank's benchmark scenario is that assuming a gradual easing of tension in the Middle East, Goldman Sachs expects the average price of Brent crude oil to be $80 per barrel in the fourth quarter of 2026. The riskier upside scenario is that if shipping in the Strait of Hormuz continues to be blocked, Goldman Sachs warns that the price of Brent crude oil may break through $120 per barrel in the fourth quarter; under more extreme circumstances, if the interruption continues until 2027, the price of oil may even reach $140 per barrel.

Individual stock news

US technology stocks generally rose before the market. Before the US stock market on Tuesday, as of press release, SanDisk (SNDK.US) and Western Digital (WDC.US) rose more than 7%, Micron (MU.US) and Seagate (STX.US) rose nearly 6%; Intel (INTC.US) rose nearly 6%, AMD (AMD.US) rose more than 4%, TSM.US (TSM.US), ASML.US (ASML.US), and Broadcom (AVGO.US) rose more than 3%, Qualcomm (QCOM.US) rose more than 2%, SpaceX (SPX.CX.US), and Nvidia (SPX.CUS) NVDA.US (NVDA.US) surpassed 1%; Coherent (COHR.US) rose more than 7%, AXT Inc (AXTI.US) rose more than 6%, Credo Technology (CRDO.US), Lumentum (LITE.US), Astera Labs (ALAB.US), MRVL.US (MRVL.US), Corning (GLW.US) rose more than 5%, and Nokia (NOK.US) rose nearly 4%.

General Motors (GM.US) Q2 results exceeded expectations and raised full-year guidance. According to financial reports, GM's Q2 revenue increased by about 2% year over year to US$48.03 billion, better than market expectations of US$47.011 billion; adjusted operating profit was US$3.9 billion, better than market expectations of US$3.7 billion; and adjusted earnings per share were US$3.57, better than market expectations of US$3.19. Regarding full-year results, GM currently expects full-year operating profit to be between US$14 billion and US$16 billion, higher than the previous forecast of US$13.5 billion to US$15.5 billion; the adjusted earnings per share for the full year are expected to be between US$12 and US$14, compared to the previous forecast of US$11.5 to US$13.5. Although the overall impact of tariffs is still significant, GM has had a year to offset the associated costs. GM expects the full year 2026 tariff impact to be around $3 billion without considering any offsetting measures. As of press release, GM's US stock rose more than 1% before the market on Tuesday.

Strong sales of innovative drugs offset the impact of generic drugs! Novartis Pharmaceuticals (NVS.US)'s Q2 performance exceeded expectations, signaling a return to the growth trajectory. Novartis reported second-quarter results that were better than market expectations. The strong performance of a new generation of anti-cancer drugs offset the impact of the blockbuster cardiac drug Enresto from being hit by generic drugs, sending a signal that the company is returning to a growth trajectory. According to financial reports, Novartis Pharmaceuticals' second-quarter sales increased 3% year-on-year to US$14.408 billion, better than analysts' average expectations of US$14.042 billion; sales growth was mainly driven by a series of innovative drugs. Core operating profit of US$5.940 billion was better than analysts' average expectation of US$5.34 billion; core earnings per share were US$2.41, which was also better than analysts' average expectation of US$2.13. Novartis Pharmaceuticals CEO Vaz Narasimhan's development strategy focused on innovative drugs is facing a critical test this year. As former blockbuster products, including the heart disease drug Entresto, experienced a decline in sales due to the impact of generic drugs, and enough new drugs have yet to fully take over to drive growth, the company is experiencing pressure from the patent cliff. However, some analysts said that the last quarter may have been the period most affected by the patent cliff faced by Novartis Pharmaceuticals. As of press release, Novartis Pharmaceuticals's US stocks rose more than 4% in the premarket on Tuesday.

Halliburton's (HAL.US) Q2 performance exceeded expectations, but a sharp drop in sales in the Middle East dragged down the stock price. Financial reports show that Halliburton's Q2 revenue increased nearly 4% year over year to US$5.71 billion, better than market expectations of US$5.5 billion; adjusted earnings per share were 55 cents, better than market expectations of 54 cents. The company's completion and production divisions, as well as drilling and evaluation divisions, have all achieved growth. The company's CEO Jeff Miller said the company has strong reserves of business opportunities in the international market and saw encouraging signs of recovery in the North American market in the second quarter. However, the oil field service giant announced a sharp decline in sales in the Middle East region. The company said sales in the Middle East and Asia fell 10% year over year to 1.3 billion US dollars, mainly due to the decline in business activities in markets such as Kuwait, Iraq and Qatar due to the ongoing conflict between the US and Iran. As of press release, Halliburton's US stocks fell more than 4% in the premarket on Tuesday.

As demand for AI soars, costs have also risen sharply! According to reports, TSM.US is planning a price increase of up to 10% in 2027. According to media reports, citing people familiar with the matter, TSMC has begun discussions with customers and plans to raise chip manufacturing prices by up to 10% in 2027 to cover rising production costs. The report said that TSMC began relevant negotiations in June and finalized a basic price increase plan this month, with an increase of between 5% and 10%. The report said that these price adjustments will take effect next year, covering advanced process chips and mature process chips. TSMC and other chip makers are under pressure to soar on a large number of cost items in the production process, including materials, equipment, and electricity costs. According to reports, TSMC delayed implementing price increases until 2027 in order to allow customers time to adjust. For a long time, TSMC has resisted drastic price fluctuations in similar memory chip industries, and has always emphasized establishing long-term partnerships with customers to cope with the sharp ups and downs of the industry cycle.

On the eve of earnings reports, layoffs were revealed, and Intel (INTC.US) took the most popular data center division to “cut costs and increase efficiency.” Chip giant Intel has once again begun a new round of cost optimization activities. On Monday, Intel officially informed employees in its data center business unit that the company is planning a new round of layoffs in the department. This is another time that Intel has used a “big layoff” after experiencing large-scale downsizing in 2024 and 2025. What is slightly paradoxical is that the “manipulated” data center and artificial intelligence (AI) division are the main engines of Intel's recent performance recovery. According to financial data, in the first quarter of 2026, the division's revenue reached about US$5.05 billion, a sharp increase of 22% over the previous year. Intel is scheduled to release its second-quarter earnings report after the US stock market this Thursday (July 23). The market's current expectations are quite optimistic. Analysts generally expect Intel's adjusted earnings per share to reach 0.22 US dollars, with revenue of 14.45 billion US dollars. Compared with the bleak situation of loss of 0.10 US dollars per share and revenue of 12.86 billion US dollars in the same period last year, it will be a sharp reversal.

Oracle (ORCL.US) was downgraded by S&P and then hit hard by regulation! A $7 billion security deposit may be required for the Wisconsin data center. After the US electricity regulator tightens credit requirements to protect residents from rising electricity prices, Oracle may need to provide more than $7 billion in collateral guarantees for its large data center in Wisconsin. According to reports, the Wisconsin Public Service Commission, which is responsible for reviewing and setting the charging standards for utility companies in the state, refused to reconsider the regulations previously implemented on the local utility company We Energies. According to this regulation, Oracle is required to provide a letter of guarantee worth $7 billion, which will cost more than $100 million a year. This nearly 1 gigawatt (GW) data center in Port Washington, Wisconsin, is a key investment for Oracle to fulfill its $300 billion computing power supply contract with OpenAI. Increased costs to obtain local electricity supply have also further exacerbated the challenges faced by the tech giant in advancing its AI strategy, including problems such as rising debt and speeding up cash consumption.

Global iron ore export hub strike crisis suspended! BHP Billiton (BHP.US) Port Hedland labor negotiations are progressing. Mining giant BHP Billiton and the union representing workers in Port Hedland in Western Australia made progress in negotiations on Tuesday. However, the two sides had not reached an agreement when they concluded the negotiations on the same day. The trade union said the negotiations will continue next week. According to reports, the “Tripartite Joint Port Trade Union Federation” stated in a statement: “The negotiations have made some progress, but the two sides have yet to reach an agreement. We will continue negotiations to establish a safe, fair and efficient iron ore industry on July 28.” Progress in negotiations means that the possibility of announcing a new strike by next Tuesday has decreased, which is certainly good news for the operation of Port Hedland, the world's largest iron ore export port.

Performance Forecast

Wednesday morning: Yingtou Securities (IBKR.US)

Wednesday pre-market: AT&T (T.US)