U.S. Stock Market Outlook | Will Tonight's CPI Confirm "Stagflation in America"?

1. As of March 12 (Wednesday) before the US stock market opens, the three major US stock index futures are all up. As of the time of writing, Dow futures are up 0.58%, S&P 500 futures are up 0.78%, and Nasdaq futures are up 0.92%.

1. As of the time of writing, the German DAX index is up 1.84%, the UK FTSE 100 index is up 0.55%, the French CAC40 index is up 1.36%, and the Euro Stoxx 50 index is up 1.46%.

1. As of the time of writing, WTI crude oil is up 1.01%, priced at $66.92 per barrel. Brent crude oil is up 0.66%, priced at $70.22 per barrel.

Market News

Tonight, will the CPI confirm "stagflation in the US"? The US Bureau of Labor Statistics will release the February CPI report on Wednesday. Economists predict that after a significant rise in January, inflation in the US may remain high in February, further proving that progress in curbing prices has stalled. After a 0.5% increase at the beginning of the year, the CPI is expected to rise by 0.3% month-on-month in February. According to surveys, the core CPI, excluding the more volatile food and energy categories, is also expected to increase by 0.3% month-on-month. Year-on-year, the CPI is expected to grow by 2.9%, while the core CPI is expected to grow by 3.2%, both 0.1% lower than in January.

Goldman Sachs joins the ranks of those bearish on US stocks, lowering the year-end target for the S&P 500 index. Goldman Sachs strategists have lowered the year-end target for the S&P 500 index from 6,500 points to 6,200 points, citing increased policy uncertainty, particularly regarding tariffs, and concerns about economic growth prospects. The downgrade of US stock index targets by Goldman Sachs further indicates growing skepticism about the outlook for the world's largest economy. This forecast downgrade also takes into account the decline in the stocks of the seven major tech companies. They stated that the significant drop in the index was largely driven by a 14% plunge in the so-called seven tech giants, whose price-to-earnings ratios fell from 30 times to 26 times. Amid increasing geopolitical uncertainty, more and more Wall Street banks are expressing concerns about economic growth, and Goldman Sachs has joined this sentiment. Analysts from Citigroup and HSBC also downgraded their views on the US stock market this week, citing concerns about the economy.

Ignoring the decline in US stocks! Trump denies recession and downplays market turmoil. US President Trump downplayed the significant market sell-off triggered by concerns that his tariff agenda would drag the economy into recession, stating that he expects the US will not fall into recession. Trump made these remarks as the market experienced three weeks of volatility Trump originally planned to raise tariffs on Canadian steel and aluminum products to 50% on Wednesday, but this decision underwent a dramatic reversal in less than six hours. White House Chief Trade Advisor Peter Navarro stated in a media interview on Tuesday afternoon that Trump no longer plans to implement this tariff adjustment. In recent weeks, before a significant drop, the U.S. President and government officials warned that as they used tariffs to rebalance trade flows and drastically cut federal government spending and labor, the U.S. economy could be at risk. Trump, in an interview on Sunday, did not rule out the possibility of an economic recession.

Trump's steel and aluminum tariffs take effect today, escalating the U.S.-EU tariff "tit-for-tat": EU's €26 billion counterattack lands. On March 12 local time, the European Commission announced that it would take countermeasures against the U.S. steel and aluminum tariff policy, planning to impose tariffs on U.S. goods worth €26 billion (approximately $28.3 billion). It is understood that the policy promised by U.S. President Trump to impose a 25% tariff on all steel and aluminum imports into the U.S. will take effect as scheduled on March 12, marking a significant escalation in the trade war between the two long-time allies. The European Commission stated in a statement that it would take "swift and appropriate" measures. EU Trade Commissioner Maros Sefcovic visited Washington last month in an attempt to find a friendly solution with senior members of Trump's team, including U.S. Secretary of Commerce Wilbur Ross.

Individual Stock News

Waterdrop Inc. (WDH.US) expects 2024 full-year revenue of 2.772 billion yuan, achieving profitability for 12 consecutive quarters. Waterdrop Inc. reported net operating revenue of 687 million yuan, with Q4 operating expenses accounting for 45.1% of revenue, and a net profit attributable to the parent company of 99.62 million yuan, achieving profitability for 12 consecutive quarters. For the full year of 2024, net operating revenue is expected to be 2.772 billion yuan, with a net profit attributable to the parent company of 368 million yuan, a year-on-year increase of 119.8%. Since announcing the stock repurchase plan in September 2021, Waterdrop Inc. has spent approximately $100 million to repurchase about 52.1 million ADS (American Depositary Shares) from the open market as of the end of February 2025. With the approval of the company's board of directors, Waterdrop Inc. also announced the initiation of a new round of cash dividend distribution to share the company's value creation with shareholders.

Hello Group (MOMO.US) Q4 net revenue decreased by 12.2% year-on-year, with Momo's paid user count dropping to 5.7 million. Hello Group reported Q4 net revenue of 2.6365 billion yuan (RMB, the same below), a year-on-year decrease of 12.2%, with a net profit attributable to the company of 187.2 million yuan, down from 452.5 million yuan in the same period last year, and diluted earnings per ADS of 1.05 yuan, down from 2.32 yuan in the same period last year. Non-GAAP net profit attributable to the company was 230.5 million yuan; diluted earnings per ADS were 1.30 yuan. In December 2024, the monthly active users of the Tantan app were 10.8 million, down from 13.7 million in the same period last year, with Q4 paid user count at 900,000, down from 1.2 million in the same period last year. In Q4, the total number of paid users for the Momo app was 5.7 million, down from 7.4 million in the same period last year. Looking ahead, the company expects total net revenue for Q1 2025 to be between 2.4 billion and 2.5 billion yuan, a year-on-year decrease of 6.3% to 2.4% EHang Intelligent (EH.US) annual total revenue reaches a historic high, with total revenue expected to be approximately 900 million yuan in fiscal year 2025. In fiscal year 2024, EHang's sales and deliveries of the EH216 series unmanned aerial vehicles reached 216 units, a 315.4% increase from 52 units in 2023; total revenue was 456.2 million yuan, a historic high, representing a 288.5% increase from 2023; adjusted net profit under non-GAAP was 43.1 million yuan, marking the company's first full-year adjusted profit under non-GAAP. The company expects total revenue for fiscal year 2025 to be approximately 900 million yuan, a year-on-year increase of about 97%.

Century Internet (VNET.US) releases Q4 and full-year financial report for 2024: full-year net revenue of 8.26 billion yuan, a year-on-year increase of 11.4%. Century Internet maintained strong growth in financial and operational data last year. In the fourth quarter of 2024, net revenue reached 2.25 billion yuan, a year-on-year increase of 18.3%; adjusted EBITDA (non-GAAP) was 721.3 million yuan (98.82 million USD), a year-on-year increase of 63.8%, which included a one-time disposal gain of approximately 87.7 million yuan (12 million USD) from part of the E-JS02 data center assets. Net profit was 3.45 million yuan, compared to a loss of 2.42 billion yuan in the same period of 2023. Full-year net revenue was 8.26 billion yuan, a year-on-year increase of 11.4%. Net profit increased by 2.85 billion yuan to 248.4 million yuan (34.03 million USD), compared to a net loss of 2.6 billion yuan in the same period of 2023.

Is the U.S. chip industry about to change? TSMC (TSM.US) reportedly teams up with three giants to take over Intel's (INTC.US) foundry. According to insiders, TSMC has proposed to invest in a joint venture with NVIDIA (NVDA.US), AMD (AMD.US), and Broadcom (AVGO.US), which will operate Intel's wafer fabs, with TSMC holding no more than 50% of the joint venture. Under the proposal, TSMC will be responsible for the operation of Intel's foundry division, which specializes in producing chips tailored to customer demands, but TSMC's stake will not exceed 50%. Insiders also revealed that TSMC has made similar investment proposals to Qualcomm. In response to the reports, TSMC stated that the company would not comment on rumors.

Musk and Trump support each other! Tesla (TSLA.US) plans to double U.S. production capacity to promote "manufacturing returning to America." Elon Musk, the world's richest person, founder of xAI, and CEO of Tesla, announced that Tesla plans to double its electric vehicle production capacity in the U.S. over the next two years. Musk's move not only demonstrates his confidence in the future development of the U.S. electric vehicle industry but also expresses strong support for former President Donald Trump's "manufacturing returning to America" policy as he seeks to return to the White House. This also reflects Musk's firm endorsement of the recent budget cuts by DOGE (Department of Efficiency of the U.S. Government) and his public support for purchasing Tesla

Important Economic Data and Event Forecast

Beijing time 20:30: U.S. February CPI year-on-year unadjusted (%).

Beijing time 22:30: U.S. EIA crude oil inventory change for the week ending March 7 (10,000 barrels).

Beijing time 23:00: U.S. February IPSOS Primary Consumer Sentiment Index PCSI.

Next day Beijing time 04:30: U.S. API crude oil inventory change for the week ending March 7 (10,000 barrels).

Next day Beijing time 00:00: EIA releases the Monthly Short-Term Energy Outlook report.

Earnings Forecast

Thursday morning: Adobe (ADBE.US)

Thursday pre-market: Futu (FUTU.US), Weibo (WB.US), Youke Lian (UCL.US)