U.S. Stock Market Outlook | Trump's Tariffs Ignite Risk Aversion, Amazon's Earnings Report Coming After Hours

1. As of the time of publication on February 6 (Thursday) before the U.S. stock market opened, the three major U.S. stock index futures were mixed. Dow futures were down 0.08%, S&P 500 index futures were up 0.10%, and Nasdaq futures were down 0.08%.

1. As of the time of publication, the German DAX index was up 1.06%, the UK FTSE 100 index was up 1.61%, the French CAC 40 index was up 0.89%, and the Euro Stoxx 50 index was up 0.77%.

1. As of the time of publication, WTI crude oil was up 0.44%, priced at $71.34 per barrel. Brent crude oil was up 0.44%, priced at $74.94 per barrel.

Market News

JP Morgan warns: Global market volatility may persist throughout the year, with tariff policies becoming the biggest driver! An electronic trading survey by JP Morgan indicates that the recent turmoil in global financial markets triggered by a series of tariff announcements from the U.S. seems to be just the beginning of a turbulent year. The survey points out that in 2025, inflation and tariffs will have the greatest impact on the market, followed by geopolitical tensions. About 41% of respondents listed volatility as their biggest expected challenge in daily trading, up from 28% the previous year. Eddie Wen, JP Morgan's global head of digital markets, stated, "What’s different this year is that the timing of volatility is somewhat unexpected. The market's reaction to news headlines is surprising, and I expect this trend to continue in the current environment."

Federal Reserve officials express concerns over tariff policies, with inflation and economic impacts in focus. Recently, several Federal Reserve policymakers emphasized that the broad tariff threats from the Trump administration against major trading partners such as Canada, Mexico, and China have increased uncertainty in the economic outlook. They are particularly concerned about the potential impact of tariffs on inflation. If tariffs lead to sustained price increases, the Federal Reserve may need to maintain high interest rates for a longer period. Among them, Chicago Fed President Austan Goolsbee stated that the high tariffs and the possibility of escalating trade wars pose a significant threat to supply chains. If inflation rises or the economy stagnates, the Federal Reserve will face a difficult choice in determining whether inflation is due to an overheating economy or tariff policies. Boston Fed President Susan Collins noted that tariffs involve multiple aspects and have second-round effects, making it difficult to accurately assess their impact on prices. If the effects of tariffs persist, the Federal Reserve will have to reassess its policies The Federal Reserve announces the 2025 bank stress test scenarios, major Wall Street banks need "additional testing." The Federal Reserve announced on Wednesday that it will test the ability of large banks to cope with increased pressures in the commercial and residential real estate markets, as part of its annual stress tests. The Federal Reserve stated that this year, 22 banks will undergo stress tests, with 8 banks that have large trading operations undergoing additional tests for global market shocks, including Wells Fargo (WFC.US), Citigroup (C.US), Goldman Sachs (GS.US), JP Morgan (JPM.US), and Morgan Stanley (MS.US).

Can costs be reduced without lowering interest rates? U.S. Treasury Secretary closely monitors 10-year interest rates, energy production increase + halving the deficit to maintain 3% economic growth. U.S. Treasury Secretary Scott Basset stated on Wednesday that the focus of the Trump administration on reducing borrowing costs is the yield on 10-year U.S. Treasury bonds, rather than the Federal Reserve's benchmark short-term interest rate. He emphasized that President Trump has not called for the Federal Reserve to lower interest rates. Basset also mentioned that President Trump believes that if energy prices fall, the tax cuts the government is working to extend are achieved, and the economy is deregulated, then the issues of interest rates and the dollar will "resolve themselves." Basset reiterated the "3-3-3" economic policy slogan: reducing the fiscal deficit from over 6% in recent years to 3% of GDP; increasing oil production by 3 million barrels per day; and maintaining economic growth at 3%.

Market trading logic focuses on "risk aversion"! Funds surge into yen and gold. As investors seek safe-haven trades amid threats of escalating Trump tariffs, the yen and gold have regained favor among global investment institutions, while the dollar, another safe-haven currency, has faced profit-taking sell-offs due to its high position and uncertainty surrounding Trump tariffs. Some forex traders bet that the USD/JPY exchange rate may drop to 147-150 in the short term, indicating an appreciation of the yen against current levels. Gold has set historical highs for five consecutive days. Goldman Sachs' analyst team reiterated its bullish outlook on gold prices, believing that the threat of U.S. tariff escalation will drive sustained demand for gold purchases, with the firm optimistic that gold prices could reach $3,000 in the next 12 months.

Individual Stock News

Eli Lilly (LLY.US) Q4 revenue exceeds expectations, profit up 114% year-on-year. Data shows that the company’s Q4 revenue was $13.53 billion, a 45% year-on-year increase, exceeding market expectations; adjusted earnings per share were $5.32, up 114% year-on-year, compared to $2.49 in the same period last year; revenue from the weight-loss drug Zepbound was $1.91 billion. Eli Lilly expects adjusted earnings per share in 2025 to be between $22.50 and $24.00, with market expectations at $23.17. The stock rose 2% in pre-market trading.

AstraZeneca (AZN.US) Q4 revenue and profit exceed expectations, expects to announce late-stage data for 7 new drugs this year. AstraZeneca (AZN.US) reported fourth-quarter profits and revenues that surpassed expectations and anticipates further growth, thanks to its blockbuster cancer drugs. In the fourth quarter, AstraZeneca's earnings per share, excluding certain items, soared to $2.09, higher than analysts' expectations of $2.04; Revenue also exceeded expectations, with a year-on-year increase of 24% to $14.89 billion. Analysts stated that the report may reassure investors about AstraZeneca's growth prospects this year, as the company will announce research results for seven new drugs. AstraZeneca CEO Pascal Soriot has transformed the company from a laggard into a leader in the competitive cancer drug market while making progress in new treatment areas such as weight loss. The stock rose over 2% in pre-market trading.

Following General Electric? Honeywell (HON.US) reportedly plans to split into three companies. According to reports, Honeywell (HON.US) plans to split into three independent companies. The industrial giant is expected to announce on Thursday its decision to separate its aerospace division from its automation business while continuing with the planned spin-off of its advanced materials division. Honeywell currently has a market capitalization of nearly $150 billion and has underperformed the market, becoming a target of investor attention. The planned split aims to enhance financial flexibility and simplify the management of each business. Honeywell fell over 3% in pre-market trading.

Arm (ARM.US) royalties surged by 23%! Will the AI computing paradigm led by DeepSeek catalyze the "ARM wave" sweeping data centers? Chip design leader Arm reported a year-on-year increase of 14% and 23% in its licensing and royalty businesses, respectively, for the last fiscal quarter. Despite strong performance in the latest quarter, the company provided cautious guidance for the current quarter, expecting total revenue for the fourth quarter of fiscal year 2025 ending in March to be between $1.18 billion and $1.28 billion, further intensifying market concerns about a slowdown in AI computing spending. However, some analysts believe that the "low-cost AI computing paradigm" led by DeepSeek—where AI training costs and inference token costs have plummeted—could significantly drive the accelerated penetration of ARM architecture into major data centers worldwide, thereby greatly expanding Arm's performance. The stock fell nearly 4% in pre-market trading.

Heavy investment in Bitcoin backfires! Strategy (MSTR.US) reports losses for four consecutive quarters, with digital asset impairment losses soaring to $1 billion. The world's largest corporate holder of Bitcoin, Strategy (MSTR.US), reported losses for the fourth consecutive quarter due to impairment on its cryptocurrency holdings. The company recorded digital asset impairment losses of $1.01 billion this quarter, compared to $39.2 million in the same period last year. As of February 2, Strategy held approximately 471,107 Bitcoins. However, Bitcoin touched $99,100 on Thursday, rising 2.24% during the day, and Strategy rose over 1% in pre-market trading.

Strong smartphone demand drives Qualcomm (QCOM.US) performance and guidance up, but concerns about stagnant patent licensing business remain. In the first fiscal quarter, Qualcomm's earnings per share, excluding certain items, reached $3.41. Revenue increased by 17% year-on-year to $11.7 billion, far exceeding analysts' expectations of $2.97 earnings per share and $10.9 billion in sales. Qualcomm expects revenue for the second fiscal quarter ending in March to reach between $10.3 billion and $11.2 billion, with earnings per share expected to be between $2.70 and $2.90, all above market expectations, but revenue from patent licensing is expected to remain flat The company's stock price is under pressure. The stock fell over 4% in pre-market trading.

Amazon (AMZN.USA) Alexa is 迎来 “换脑时刻”：The generative AI version is about to be unveiled. According to reports, Amazon is set to launch its long-awaited and repeatedly delayed "Alexa" generative artificial intelligence voice service assistant—equivalent to a voice version of ChatGPT—and plans to hold a press conference later this month to preview the generative AI assistant. Once released, this will be the most significant upgrade for Alexa since its initial launch over a decade ago, which accelerated a wave of digital assistant popularity. Additionally, Amazon will release its earnings report after the market closes on February 6, Eastern Time. Institutions generally expect Amazon to achieve revenue of $187.25 billion in Q4 2024, an increase of 10.17% year-on-year; the expected earnings per share is $1.49, an increase of 48.51% year-on-year.

Important Economic Data and Event Forecast

At 21:30 Beijing time, the number of initial jobless claims in the U.S. for the week ending February 1, and the number of continuing jobless claims in the U.S. for the week ending January 25.

At 03:30 Beijing time the next day, Federal Reserve Governor Waller will give a speech.

Earnings Forecast

Friday morning: Amazon (AMZN.US), Fortinet (FTNT.US), Verisign (VRSN.US)