US stock outlook | Futures of the three major stock indexes fell sharply, popular semiconductor stocks generally rose before the market, and the Fed's interest rate hike is expected to be postponed until January next year

Pre-market market trends

1. On October 23 (Friday), the futures of the three major US stock indexes fell sharply before the US stock market. As of press release, Dow futures were down 0.64%, S&P 500 futures were down 0.27%, and NASDAQ 100 futures were down 0.14%.

2. As of press release, the German DAX index fell 0.75%, the French CAC40 index fell 0.69%, the UK FTSE 100 index fell 0.49%, and the European Stoxx 50 index fell 0.60%.

3. As of press release, WTI crude oil rose 1.46% to $100.92 per barrel. Brent crude rose 1.25% to $114.59 per barrel.

Market news

The decline in global technology stocks has come to a standstill! The Chinese and South Korean stock markets underwent a major reversal, and the stock prices of popular semiconductor stocks generally rose before the US stock market. On October 23, there was a clear reversal in Asian technology stocks. The Korea Composite Stock Price Index fell by more than 4% during the intraday period, then recovered and eventually rose 0.30%; SK Hynix rose 4.42%, and Samsung Electronics rose 0.47%. The A-share GEM Index also experienced severe shocks. It fell 3.21% during the intraday period, then rebounded strongly and closed up 4.16%. The market turnover on the same day was about 1.96 trillion yuan, and more than 4,500 individual stocks rose. After the Philadelphia Semiconductor Index plummeted nearly 7% in a single day on Thursday, before the US stock market, SK Hynix rose more than 5%, SanDisk rose 2.8%, and Micron Technology rose 2.62%; pre-market stock prices of popular semiconductor sector stocks such as Nvidia, TSMC, Mywell Technology, Broadcom, and AMD all achieved slight increases.

Russian diesel returns to America! The first batch of 40,000 tons of goods sailed to New York, and Russia plans to resume normal export scale by the end of the year. Russian presidential press secretary Peskov confirmed today (October 23) that Russia has sent the first tanker carrying diesel to the US. He said that according to the agreement reached between Russia and the US, Russia's diesel supply to the US has already started and will continue at the pace in the future. According to LSEG shipping data, the Maltese tanker Agioi Fanendes loaded 40,000 tons of ultra-low sulphur diesel at the Russian Baltic port Primorsk on October 22, and the destination was the United States. The shipment comes at a time when the Trump administration is pushing Russia to increase diesel exports. Trump hopes to use this to ease the pressure on fuel prices in the US and gain voter support before the November 3 midterm elections. Trump announced on October 9 that Russia will immediately export 300,000 tons of diesel, increasing to 500,000 tons in November, then further expanding to 1 million tons. Novak said last week that Russia is expected to return monthly diesel exports to normal levels of 3 million to 3.5 million tons before the end of the year.

The wave of AI computing power and semiconductor sell-offs has sparked economic growth fears, and the Federal Reserve's interest rate hike is expected to be postponed until January next year. The concentrated sell-off of AI technology stocks, the intensification of the French sovereign debt crisis, and the triple pressure of the Middle East oil price shock exploded simultaneously. The US treasury bond market ushered in the strongest single-day rebound in three years, and the safe-haven logic returned to the main logical array of the market. On Thursday, the 10-year US Treasury yield fell 19.3 basis points to 4.952% in a single day, returning below 5%, unexpectedly breaking the biggest one-day decline since the Silicon Valley Bank crisis in March 2023. The data shows that in the past ten years, only 15 trading days have experienced such magnitude of single-day fluctuation. Meanwhile, the market's expectations for the Fed's interest rate hike have moved significantly backwards — traders in the federal funds rate futures market are now fully pricing an interest rate hike of 25 basis points in January next year; the previous time point expected by the market was December.

TS Lombard extreme stress test: The AI bubble may burst or cause the S&P 500 to plummet 30% and the $20 trillion market value evaporated. TS Lombard's Dario Perkins (Dario Perkins) predicted in a scenario analysis released on Thursday that if AI capital spending collapses, the US stock market capitalization will evaporate by about $20 trillion, trigger credit losses of 125 billion to 190 billion US dollars, and bring about a moderate recession — but investors can protect themselves by diversifying global stocks and buying bonds at opportunities. Perkins simulated the financial impact of a sharp drop in AI capital spending. It is expected that the S&P 500 index will fall 30%, technology stocks will fall 40%, and other sectors will fall 20%. “Market concentration means that the decline in AI-related spending will hit the US stock market hard,” Perkins wrote. “This will cause large-scale losses and credit pressure on the technology sector.”

Individual stock news

Western Digital (WDC.US)'s Q1 revenue surged 55% year over year, with results and guidance exceeding expectations. Western Digital announced financial results for the first quarter of the 2027 fiscal year after the market on Thursday. Despite the company's strong performance and issuing guidelines for the next quarter that were higher than market expectations, the stock price experienced a sharp rise and fall in post-market trading. At one point, it went from rising more than 2% to falling by about 7%, drawing market attention. Financial reports show that for the first fiscal quarter ending October 2, 2026, Western Digital's revenue reached US$4.381 billion, up 55% year on year, up 17% month on month; GAAP net profit was US$1,779 billion, up about 50% year on year; and GAAP diluted earnings per share were US$4.63, up 51% year on year. Non-GAAP adjusted net profit was $1,779 million, up 172% year over year; adjusted earnings per share were $4.64, up 161% year over year, up from $1.78 in the same period last year. Analysts had expected Western Digital's revenue for the first fiscal quarter to be around US$4.15 billion, with adjusted earnings per share of approximately US$4.10. Both indicators announced by the company exceeded market expectations. Looking ahead to the second quarter of fiscal year 2027, Western Digital expects revenue of $5 billion to 5.2 billion US dollars, representing a year-on-year increase of about 66% to 72%; non-GAAP gross margin is expected to be 60% to 61%, and adjusted earnings per share are expected to be 5.60 to 6.00 US dollars. The above guidelines were also higher than the market's previous expectations.

Bloom Energy's (BE.US) Q3 revenue surged 138% and turned a loss into a profit, raising its full-year results guidance. Bloom Energy announced financial results for the third quarter of 2026 after the US stock market on Thursday. According to the data, the company's revenue for the quarter reached US$1,236 million, a year-on-year increase of 138.1%, a record quarterly high; GAAP's net profit attributable to common shareholders was US$250 million, with a net loss of US$23.09 million for the same period last year, turning a loss into a profit. Looking ahead to the full year of 2026, Bloom Energy raised its revenue forecast from US$3.9 billion to US$4.2 billion to US$4.4 billion to US$4.6 billion. The median value of the new guidelines increased by about 122% over the full year of 2025. At the same time, the company raised its full-year non-GAAP operating profit forecast from $800 million to $900 million to $960 million to $1.03 billion, and raised its non-GAAP adjusted earnings per share forecast from $2.55 to $2.85 to $3.40. The full year non-GAAP gross margin target remained at around 34%.

Gilead Sciences (GILD.US) acquired the PepStar oral inflammation drug program for $1.275 billion in cash to expand the inflammatory bowel disease pipeline. Gilead Sciences said on Thursday it will acquire PepStar Therapeutics' oral inflammatory medicine program with a $1.275 billion cash advance, which includes an experimental gut disease treatment. The deal comes after Gilead's experimental oral drug emvistegrast for chronic intestinal diseases announced positive interim results on Monday to add an inflammatory bowel disease (IBD) drug candidate to its product portfolio. Gilead said it believes HCXT-2001 has the potential to be developed alone or jointly with other projects in the pipeline.

Rocket Lab (RKLB.US) launched for the 19th time in the year: the 98th “electronic” rocket broke another record, continuing to consolidate its leading position in small satellite launches. Rocket Lab launched its “Electron” (Electron) rocket from New Zealand's Launch Complex 1 (Launch Complex 1) and carried out an exclusive launch mission for signal intelligence company HawkEye 360 (HawkEye 360). The mission, codenamed “We're Not Hawking Around,” took off at 8:11 p.m. New Zealand Daylight Time (NZDT) on October 23, 2026, and deployed three HAWK satellites to near-Earth orbit at an altitude of 520 kilometers. These spacecraft fly in Samsung formations to collect radio frequency signals for maritime tracking, GNSS interference detection, radar activity monitoring, communication mapping, and support space defense. This flight was Rocket Lab's 98th “electronic” rocket mission and its 19th launch in 2026, further continuing the rocket's record in the field of exclusive use of small satellites.

The shortage of diesel fuels demand to increase production! Oil service giant Schlumberger (SLB.US) handed over financial reports that exceeded expectations. According to Schlumberger's third-quarter earnings report released on October 23, revenue was 9.449 billion US dollars, up 6% year on year and 5% month on month; adjusted earnings per share were 0.64 US dollars, up 16% month-on-month, higher than market expectations of 0.62 US dollars, and revenue also exceeded the consensus estimate of about US$9.27 billion. Middle East business revenue increased 13% month-on-month, with offshore development activities and demand for production services in North America driving the recovery; production systems business revenue reached US$4 billion, up 15% year over year. The adjusted profit margin before interest, tax, depreciation and amortization rebounded to 21.9%, but it was still lower than the same period last year. This financial report shows that business recovery is spreading, and profitability has not yet fully recovered to last year's level; excluding the impact of the ChampionX acquisition, the year-on-year increase in revenue was 2%, which also shows that mergers and acquisitions are still an important source of reported revenue growth.

American Express (AXP.US) raised its full-year profit guidance. According to the results announced by American Express on October 23, the third-quarter revenue after deducting interest charges was US$20.062 billion, up 9% year on year; credit card transaction volume was US$454 billion, up 8% year on year. Net profit of US$3.712 billion, up 28% year over year; earnings per share of US$5.42, up 31% year over year, including proceeds from sale of Global Business Travel Group shares. Excluding these earnings and restructuring charges, adjusted earnings per share were $4.68, up 13% year over year. At the operating level, net card fee revenue increased 16%, and global travel and entertainment credit card spending increased 10% at a fixed exchange rate; the net write-off rate of consumer and small business cardholders fell from 1.9% to 1.8%, indicating that high-end customer spending, membership payments, and credit performance are still resilient. American Express maintained its target of 10% revenue growth for the year, and the annual earnings per share guideline rose to $18.30-18.60; after excluding the impact of share sales and restructuring, the comparable adjusted guideline was $17.60-17.90. Compared with the previous increase of only $0.30, the upper limit remained unchanged, reflecting a steady improvement in operating expectations. The company renewed the Marriott co-branded card partnership, introduced more than 1 million Airbnb listings to the travel platform, and upgraded corporate cards and expense management services.

Key economic data and event forecasts

9:45: US initial S&P global manufacturing PMI value for October, US initial S&P global services PMI value for October, US initial S&P global composite PMI value for October

22:00: Final value of the US University of Michigan consumer confidence index in October, the final value of the US inflation rate forecast for the first year in October, the final value of the US inflation rate forecast for the 5-10 year period in October

The next day at 01:00 Beijing time: Total number of oil drills in the US for the week from October 23 (port)

Next day: 03:30 Beijing time: The CFTC releases the weekly position report.