US stock outlook | The three major stock index futures rose sharply, oil prices continued to fall, and chip and optical communications stocks rose before the market, SpaceX (SPCX.US) released financial reports after the market

Pre-market market trends

1. On August 4 (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 1.08%, S&P 500 futures were up 0.36%, and NASDAQ futures were up 1.16%.

2. As of press release, the German DAX index rose 0.70%, the UK FTSE 100 index rose 0.50%, the French CAC40 index rose 0.34%, and the European Stoxx 50 index rose 0.82%.

3. As of press release, WTI crude oil fell 3.71% to $77.36 per barrel. Brent crude fell 2.92% to $81.32 per barrel.

Market news

US Treasury Secretary: An agreement may be reached with Iran tomorrow to open the Strait of Hormuz. According to US media reports on the 4th, US Treasury Secretary Bezent said that the US may reach an agreement with Iran tomorrow to open the Strait of Hormuz.

Goldman Sachs Partner: Profit is the core driving force, and S&P is expected to reach another record high within 500 years. Strong corporate profits are providing the strongest support for US stock bulls. Goldman Sachs partner John Flood believes that as market positions become “clean,” the S&P 500 index is expected to reach another record high within the year, and the core logic driving this judgment is profit. According to Goldman Sachs data, the year-on-year growth rate of the S&P 500 index's second-quarter earnings per share was as high as 45%, far exceeding the market's consensus forecast of 22% at the beginning of the quarter. Even excluding non-recurring items such as “other income” related to Google and Amazon's total equity investment of about US$151 billion, the S&P 500 earnings per share growth rate still reached 26%, not only faster than in the first quarter, but also the fastest growth rate since 2021. Judging from the breadth of the revisions, the number of companies whose profit expectations were raised in the S&P 500 constituent stocks continued to be higher than the number of companies that were lowered, and the breadth of the revisions remained positive. Goldman Sachs believes that this comprehensive upward trend is an important foundation to support market valuations. John Flood pointed out that the main dividends of the AI supercycle have not been fully released, and the world's largest technology companies are continuing to increase capital investment to promote the continuous expansion of the breadth and depth of profit improvements.

Castle Securities: The speculative enthusiasm of retail investors has cooled down, and the core logic of rising US stocks is still “intact.” Castle Securities said that although speculative trading by retail investors has clearly cooled down recently, the core driving factors driving US stocks to record highs this year are still “intact,” and the market is gradually shifting from being dominated by capital flows to being driven by corporate fundamentals. Scott Rubner, head of stock and stock derivatives strategy at Castle Securities, said in the latest report: “The market is returning from an environment driven by capital flows to a stage where corporate profits, corporate stock buybacks, and the macroeconomic environment are increasingly dominated.” Rubner believes that after the “excessive speculation” accumulated in the market was released to a certain extent, the fundamentals of US stocks were healthier. The overall performance of recently released corporate earnings reports was strong. Most companies' profits exceeded the market's already high expectations, providing support for subsequent stock market trends.

The “sleeping giant” is waking up: the undercurrent of the $30 trillion US bond market is surging, how long can US stocks last? The US bond market, which has long been regarded as a “sleeping giant,” is undergoing significant changes in the global financial core market. The US debt market, which is about 30 trillion US dollars, is an important foundation for the global financial system. In the next few days to weeks, investors are worried that sharp fluctuations in US bond yields may be further transmitted to other asset markets such as stocks. After experiencing a continuous rise in early July, long-term US bond yields accelerated markedly in the last week of July. Some market participants believe that this trend reflects investors testing the determination of the Federal Reserve to contain inflation. Historical experience shows that when US bond yields approach current levels, financial pressure often begins to spread to other markets and may drag down the stock market. As investors began to guard against further increases in interest rates, the ICE Bank of America Merrill Lynch MOVE Index, which measures anticipated fluctuations in the US bond market, continued to rise and hit its highest level since May. At the same time, demand for put options related to iShares's 20-year US bond ETFs is also rising, driving up the trading ratio between put options and call options.

The Walsh communication triggered a crisis of trust, and Xiaomo brought forward the Federal Reserve's interest rate hike expectations to December of this year. Federal Reserve Chairman Walsh's press conference after the policy meeting last week raised market concerns about the Fed's ability to resist inflation. The J.P. Morgan Chase economic team believes that Walsh's failure to clearly explain the future policy path has weakened the market's confidence in the Federal Reserve's control of inflation, and adjusted interest rate forecasts ahead of schedule as a result. Michael Ferrori, chief US economist at J.P. Morgan Chase, and his team said that after the Federal Reserve's reputation was damaged, the urgency of policy tightening is rising, and it is expected that the next rate hike may be brought forward from the second half of 2027 to December of this year. However, the team also acknowledged that the Federal Reserve may act at the September meeting as soon as possible.

The risk of attacks escalated, and shipping traffic in the Strait of Hormuz fell to a freezing point. According to monitoring by shipping data companies Kpler and Vortexa, the apparent traffic flow in the Strait of Hormuz has been reduced to a sporadic state. Just this Monday, only three tankers crossed the strait, a sharp drop from seven last Sunday. In order to avoid potential damage, more and more tankers are choosing to turn off the signal transmitter and turn on “stealth mode” to carry out ghost voyages when passing through critical waters. Furthermore, US media reported on the 3rd, citing Iranian and US officials, that Iran and Oman are close to reaching an agreement on navigation through the Strait of Hormuz. The report said that according to the agreement discussed between the two sides, ships entering the Persian Gulf will travel on a waterway close to the Iranian coast and controlled by Iran, while those leaving will take a channel close to Oman. However, Iranian officials said that even if Iran and Oman reach an agreement, the Strait of Hormuz will continue to be closed if the US does not lift the blockade of Iranian ports and resume implementation of the 14-point memorandum of understanding previously reached between Iran and the US.

Hoard 200,000 tons! The US set off a record wave of copper imports and is betting on Trump's next tariff card. The US is ushering in the biggest wave of copper imports in at least 12 years. Traders are betting on the refined copper tariff policy to be announced by US President Trump to ship large amounts of copper resources to the US ahead of schedule. According to shipping data, more than 200,000 tons of copper entered the US in July this year, the highest level in a single month since IHS Markit began recording in 2014. Meanwhile, US copper inventories continued to rise. As of last Friday, the combined inventory of the US Mercantile Exchange (COMEX) and London Metal Exchange (LME) had exceeded 740,000 tons. According to LME data, copper stocks in private storage at US ports also reached about 110,000 tons. Large amounts of copper are flowing into the US and are changing the global supply pattern. Since prices in the US market are significantly higher than in the London market, traders are transferring copper from other regions to the US to gain room for arbitrage brought about by tariff expectations.

Individual stock news

Chip stocks and optical communication stocks generally rose before the market. Before the US stock market on Tuesday, as of press release, Western Digital (WDC.US) rose nearly 7%, Seagate (STX.US) rose nearly 6%, SanDisk (SNDK.US), Intel (INTC.US), and AMD (AMD.US) rose more than 5%, SK Hynix (SKHY.US) and Micron (MU.US) rose more than 4%, Qualcomm (QCOM.US) and Broadcom (AVGO.US) surged nearly 3%; in optical communications stocks, coherent (COHR.US) surged more than 17% Lumentum (LITE.US) rose more than 14%, Corning (GLW.US) rose more than 9%, Mwell Technology (MRVL.US) and Astera Labs (ALAB.US) rose nearly 8%, Credo Technology (CRDO.US) rose more than 7%, and Nokia (NOK.US) rose more than 5%.

After the most expensive breakout in history, Starship, Starlink, and AI computing power, who can save SpaceX (SPCX.US)'s trillion valuation? After experiencing a sharp sell-off in stock prices and a sharp sell-off where the market value evaporated by more than 500 billion US dollars after listing, Musk's SpaceX will hand over its first report card after the US stock market on Tuesday. This financial report is not only a test of its extremely money-burning business model, but also a long and short confrontation involving market beliefs against the backdrop of Hong Feng's imminent lifting of the ban on restricted stocks and a sharp rise in shorting power. Regarding this major financial report, the market will focus on the number of Starlink users, satellite internet revenue, rocket launch frequency, government contracts, and Starship project expenses. Given that SpaceX's stock price fluctuated greatly after listing, this first earnings report will help investors assess whether the company's business model, profitability, and cash flow can support its high valuation.

The performance of the largest supplier of AI to the US military has exploded! Palantir (PLTR.US) raised its full-year forecast sharply, and the CEO bluntly stated that commercial demand was “extraordinary.” According to financial reports, Palantir Q2 revenue increased 94.0% year over year to US$1.94 billion, exceeding expectations of US$130 million; adjusted earnings per share were $0.41, exceeding expectations of US$0.06. The company said that US commercial sales in the second quarter were “amazing”, surging 149% year over year to US$764 million, far higher than analysts' average expectations of US$716.4 million. Palantir currently expects sales to reach US$8.16 billion in 2026, higher than the analysts' average forecast of US$7.7 billion; the adjusted operating profit for the full year is estimated to be US$4.89 billion to US$4.91 billion, higher than the upper limit of the previously forecast range of US$4.45 billion. A stronger outlook helps ease investors' concerns. Investors previously feared that AI developers such as Anthropic are selling their own software, and that governments outside the US are increasingly inclined to cooperate with domestic technology companies, which could damage Palantir's business. As of press release, Palantir's US stocks surged more than 16% before the market on Tuesday.

The AI frenzy spills over to the power chain! Onsemi Semiconductor (ON.US)'s Q2 results and Q3 outlook both surpassed expectations. The company's second-quarter revenue was $1.6 billion, up 9.2% year over year, slightly exceeding analysts' average expectations of about $1.59 billion; adjusted earnings per share were $0.74, up about 40% year over year, higher than market expectations of $0.71. The company expects third-quarter revenue to be between $1.65 billion and $1.75 billion, with a median forecast range higher than analysts' average forecast of $1.67 billion; it is expected that adjusted earnings per share for the third quarter will be between $0.81 and $0.93, and the median forecast range is also significantly higher than analysts' average forecast of $0.83. This strong outlook reflects a surge in demand for the company's power management chips for AI data centers. The company's CEO said, “The AI data center related business is still our fastest growing segment. We currently expect this business to at least double its revenue in 2026, which reflects the strength of our smart power product portfolio and the growing adoption of Ansemi by customers throughout the power tree architecture.” As of press release, Ansemi Semiconductor's US stock rose more than 8% in the premarket on Tuesday.

Leveraging weak yen and hybrid dividends! Toyota Motor Corporation (TM.US) spent trillions of yen to buy back shares, drastically raising its profit forecast for the 2027 fiscal year. According to financial reports, Toyota's sales for the first quarter of fiscal year 2027 were 13.5 trillion yen, up 10.4% year on year; net profit to mother was 1.48 trillion yen. The company benefited from the continued popularity of oil-electric hybrid vehicles in the US, which, together 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 war. Meanwhile, the company announced a 1 trillion yen ($6.3 billion) share repurchase plan and raised profit expectations. Toyota raised its operating profit forecast for the fiscal year ending March next year by more than 10% to 3.4 trillion yen, with an average analyst forecast of 3.9 trillion yen.

World Cup ads are booming, and Snap (SNAP.US) Q2 revenue exceeds expectations. According to financial reports, in the second quarter ending June 30, Snap achieved revenue of 1.6 billion US dollars, a significant increase of 19% over the previous year, which was significantly higher than the average analysts' expectations of 1.54 billion US dollars. Among them, advertising revenue, which accounts for the majority of total revenue, increased 9% year over year to US$1.28 billion. The net loss narrowed sharply from US$262.6 million in the same period last year to US$164 million. Adjusted profit of US$250 million was significantly better than market expectations of US$192 million. Snap's outstanding performance in advertising this quarter was largely driven by marketing spending related to the FIFA World Cup and a marked improvement in the marketing momentum of major North American advertisers. As of press release, US stocks rose nearly 7% before the market on Tuesday.

Pfizer (PFE.US) Q2 results exceeded expectations and raised full-year revenue guidance. According to financial reports, Pfizer's second-quarter revenue was US$15.03 billion, better than market expectations of US$14.41 billion; adjusted earnings per share were US$0.77, better than market expectations of US$0.68. The company expects full-year revenue of US$60.5 billion to US$62.5 billion, higher than the previous forecast of US$59.5 billion to US$62.5 billion, but the median forecast range is lower than the market estimate of US$61.8 billion. The company also maintained its full-year adjusted earnings guidance of $2.80 to $3 per share, which analysts expected to be $2.94. Pfizer also separately announced that the company is expanding two cost reduction programs, and it is estimated that the combined net savings achieved by the two plans will increase to 9.7 billion US dollars by 2029.

Key economic data and event forecasts

22:00 Beijing time, US JoLTS vacancies in June

Performance 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)