U.S. Stock Preview | Broadcom's Earnings Report Approaches, Popular Chinese Concept Stocks Rise Pre-Market

Pre-Market Market Trends

1. As of March 6 (Thursday) pre-market, U.S. stock index futures are all down. As of the time of writing, Dow futures are down 0.82%, S&P 500 futures are down 0.98%, and Nasdaq futures are down 1.21%.

1. As of the time of writing, the German DAX index is up 0.47%, the UK FTSE 100 index is down 0.83%, the French CAC40 index is down 0.35%, and the Euro Stoxx 50 index is down 0.25%.

1. As of the time of writing, WTI crude oil is up 0.74%, priced at $66.80 per barrel. Brent crude oil is up 0.63%, priced at $69.74 per barrel.

Market News

Wall Street's recession alarm is flashing: Tariff pressures combined with collapsing confidence, the U.S. economy is approaching a "critical point." As tariff-related uncertainties and weak economic indicators trigger panic on Wall Street, financial markets signal that the risk of economic recession is increasing. JP Morgan's model shows that the market-implied probability of recession has risen from 17% at the end of November to 31% on Tuesday. Key indicators such as five-year U.S. Treasury bonds and base metals indicate a higher likelihood of economic contraction. Although far from the base case, similar models from Goldman Sachs also indicate that the risk of recession is rising, from 14% in January to 23%. JP Morgan strategist Nikolaos Panigirtzoglou stated: "Due to weak U.S. economic activity data and the weakening of business and consumer confidence in recent weeks, the tariffs imposed on Canada and Mexico on March 4 have increased the risk of a greater blow to future business and consumer confidence." "This, in turn, exacerbates concerns about a U.S. economic recession, and the market has naturally digested a higher probability of recession."

Has the risk really dissipated? JP Morgan blasts "tariff optimism"! The rise in U.S. stocks on Wednesday was attributed to U.S. Commerce Secretary Gina Raimondo's comments about a possible easing of tariffs on Canada and Mexico. However, JP Morgan's market intelligence team stated that the rebound in U.S. stocks is merely a temporary release of optimistic sentiment. Team leader Andrew Tyler sharply pointed out: "This is just slowing down the countdown of a ticking time bomb." Tyler stated: "Auto tariffs are only postponed, not canceled, and Canadian officials have made it clear that 'there will be no compromise unless the U.S. fully cancels the tariffs,' not to mention that the countdown for retaliatory tariffs on April 2 has already begun." The team emphasized that while the stock market is celebrating the temporary relief from tariff pressures, substantial risks are still accumulating The team added: "We originally thought tariffs were just bluster at the negotiating table, but it turns out we were very wrong." "Even considering exemptions for cars and other items, the current market expectations for GDP and S&P 500 earnings per share in fiscal year 2025 are overly optimistic."

Many bad news have been digested! "Wall Street Oracle": U.S. stocks may surge. Tom Lee, known as the "Wall Street Oracle," stated that the U.S. stock market has already digested many bad news, and now is a good time to buy, with expectations of significant increases in the coming months. The head of research at Fundstrat Global Advisors said: "We are now seeing significant price adjustments, and market sentiment has cooled. For instance, on Wednesday, we received a poor ADP employment report, yet the market actually rose." In his view, this indicates that U.S. stocks are "rising due to bad news, which is a good sign that much of the bad news has been factored into stock prices." He noted that the market has essentially gone through what he considers a bear market in terms of sentiment, and previous momentum trading is gradually unwinding, making it "very likely" that U.S. stocks will "surge significantly" in March, April, and May, potentially rising by 10% to 15%.

The tapering plan faces a "political black swan," and the debt ceiling may force the Fed to urgently halt QT. Roberto Perli of the New York Fed stated that the current deadlock over the debt ceiling could threaten the Fed's ongoing balance sheet reduction, causing fluctuations in the central bank's liabilities and resulting in volatility in money market rates. He indicated that once the debt ceiling issue is resolved, the Treasury typically quickly rebuilds its cash reserves—this is the largest liability on the Fed's balance sheet—leading to a rapid decline in other liabilities, which could particularly affect bank reserves, as overnight reverse repurchase agreements "are essentially exhausted." He added: "The longer the (Fed's) balance sheet reduction continues in the face of the debt ceiling issue, the greater the risk that once the debt ceiling issue is resolved, reserves will quickly decline to levels that could cause significant volatility in the money market."

Former Treasury Secretary warns the White House: Trump's words and actions are "very frightening," and the dollar faces its biggest crisis in half a century. Former U.S. Treasury Secretary Lawrence Summers stated that President Trump's erratic policy actions and statements pose the greatest risk to the dollar's dominant position in the world economy in half a century. Summers remarked: "The broad practices we adopt in relation to the rest of the world pose the greatest threat to the dollar's status as the world's central currency over the past fifty years." He pointed out that the recent sell-off in the U.S. stock market indicates that investors are concerned about the direction of U.S. policy. However, he also added: "It is still too early to assert that the exceptionalism of the U.S. as the world's top economy has ended based on events that have occurred over just a few days or even weeks." Data showed that the dollar index plummeted 1.17% in a single day on Wednesday. As of the time of writing, the dollar index fell 0.13% to 104.17, the lowest level since early November last year

Individual Stock News

Most popular Chinese concept stocks rise before the market. As of the time of writing on Thursday, U.S. pre-market, Kingsoft Cloud (KC.US) rose over 6%, JD.com (JD.US) rose nearly 6%, GDS Holdings (GDS.US) rose nearly 5%, Pinduoduo (PDD.US) and Bilibili (BILI.US) rose over 3%, Alibaba (BABA.US) and NetEase (NTES.US) rose nearly 3%, Tencent Music (TME.US) and Baidu (BIDU.US) rose nearly 2%.

Star tech stocks fall before the market. As of the time of writing on Thursday, U.S. pre-market, Broadcom (AVGO.US) and ASML (ASML.US) fell over 3%, Micron Technology (MU.US) and TSMC (TSM.US) fell over 2%, NVIDIA (NVDA.US), Oracle (ORCL.US), and Tesla (TSLA.US) fell nearly 2%, Amazon (AMZN.US), Qualcomm (QCOM.US), AMD (AMD.US), Microsoft (MSFT.US), and Salesforce (CRM.US) fell over 1%.

Is the impact of DeepSeek negligible? Is Broadcom's (AVGO.US) AI outlook still promising? Broadcom will announce its first-quarter earnings after the U.S. market closes on Thursday (morning of March 7, Beijing time). The market generally expects Broadcom's Q1 revenue to be $14.61 billion, a year-on-year increase of 22%; adjusted net profit to be $7.39 billion, higher than $5.25 billion in the same period last year. Ahead of this earnings report, the chip and artificial intelligence (AI) sectors faced selling pressure late last week. Investors reacted to NVIDIA's earnings performance and new tariff policies. Although NVIDIA's performance exceeded Wall Street analysts' expectations, investors may expect more while worrying about the investment outlook in the AI field, as well as the potential impacts of the Trump administration's tariff policies and AI chip export restrictions. Nevertheless, most investors remain optimistic about Broadcom's growth opportunities in the AI sector. The proportion of AI-related revenue in Broadcom's semiconductor business has significantly increased from less than 5% in 2019 to 41% in 2024; AI revenue is expected to jump from $3.8 billion in 2023 to $12.2 billion in 2024, a year-on-year increase of 220%. Additionally, although the rise of DeepSeek has led to a decline in demand for high-end AI chips, which may have a chain reaction on Broadcom's technology and components business, analysts believe this actually drives demand for custom application-specific integrated circuits (ASICs).

JD.com (JD.US) shines in 2024: Multi-sector collaborative growth, net profit attributable to shareholders increases by 71.14% to 41.359 billion yuan. JD Group's revenue for the fourth quarter of 2024 was 346.986 billion yuan (RMB, the same below), an increase of 13.37% year-on-year. Operating profit was 8.491 billion yuan, a year-on-year increase of 3.19 times; net profit attributable to ordinary shareholders of the company was 9.854 billion yuan, a year-on-year increase of approximately 1.91 times; basic earnings per share were 3.39 yuan. The total revenue for the year 2024 was 1,158.819 billion yuan, an increase of 6.8% compared to the full year of 2023. Operating profit was 38.736 billion yuan, a year-on-year increase of 48.84%; The net profit attributable to ordinary shareholders of the company was 41.359 billion yuan, a year-on-year increase of 71.14%; basic earnings per share were 13.83 yuan, and cash dividends per share were 0.5 USD.

Marvell Technology (MRVL.US) performance guidance below top expectations, pre-market stock price plummets. The financial report shows that Marvell Technology's revenue for the fourth quarter of fiscal year 2025 increased by 27% year-on-year to 1.82 billion USD, exceeding analysts' expectations of 1.8 billion USD; adjusted earnings per share were 60 cents, surpassing analysts' expectations of 59 cents. However, the company expects revenue for the first quarter of fiscal year 2026 to be approximately 1.88 billion USD, which, while in line with analysts' average expectations, is below some forecasts as high as 2 billion USD; adjusted earnings per share are expected to be between 56 cents and 66 cents, while analysts previously expected 60 cents. The company's revenue guidance falling short of the market's highest expectations led to its stock price dropping over 16% in pre-market trading on Thursday, indicating that Wall Street's attitude towards artificial intelligence (AI) companies continues to be stricter.

Macy's (M.US) Q4 performance exceeds expectations, but 2025 fiscal year revenue guidance falls short. The financial report shows that Macy's Q4 revenue was 8.01 billion USD, 240 million USD higher than analysts' expectations; adjusted earnings per share were 1.80 USD, 26 cents higher than analysts' expectations. The company expects revenue for the fiscal year 2025 to be between 21 billion USD and 21.4 billion USD, while the market expectation is 21.8 billion USD. As of the time of publication, Macy's stock fell nearly 2% in pre-market trading on Thursday.

The U.S. is pressuring India to eliminate auto tariffs, and Tesla (TSLA.US) is expected to open the Indian market. Sources revealed that the U.S. hopes India will eliminate auto import tariffs under the proposed trade agreement between the two countries, but India is reluctant to immediately reduce auto import tariffs to zero, although it is considering further tariff cuts. Sources indicated that India's high auto tariffs will be a focal point in bilateral trade agreement negotiations, paving the way for U.S. electric vehicle manufacturer Tesla to enter the Indian market. Reports last month indicated that Tesla plans to ship thousands of vehicles to a port near Mumbai in the coming months to officially enter the Indian market. Insiders stated that Tesla plans to start selling these vehicles in the major cities of Mumbai, Delhi, and Bangalore around the third quarter of this year.

Important Economic Data and Event Forecasts

Beijing time 21:30 Initial jobless claims in the U.S. for the week ending March 1

Beijing time the next day 04:30 Federal Reserve Governor Waller speaks

Earnings Forecast

Friday morning: Broadcom (AVGO.US), Costco (COST.US), Cango (CANG.US)