U.S. Stock Outlook | Three Major Index Futures Decline, U.S. April CPI to Be Announced Tonight

Pre-Market Market Trends

1. As of May 13 (Tuesday), U.S. stock index futures are all down before the market opens. As of the time of writing, Dow futures are down 0.60%, S&P 500 futures are down 0.23%, and Nasdaq futures are down 0.16%.

1. As of the time of writing, the German DAX index is up 0.21%, the UK FTSE 100 index is up 0.15%, the French CAC 40 index is up 0.10%, and the Euro Stoxx 50 index is up 0.06%.

1. As of the time of writing, WTI crude oil is up 0.97%, priced at $62.55 per barrel. Brent crude oil is up 0.82%, priced at $65.49 per barrel.

Market News

Tariff impacts begin to show, U.S. April CPI expected to rebound. The U.S. April CPI will be released tonight. Market consensus predicts that the U.S. April CPI is expected to rise 0.3% month-on-month and 2.4% year-on-year. Core inflation, excluding food and energy prices, is expected to rise 0.3% month-on-month and 2.8% year-on-year. In March, due to falling energy prices driving inflation down, the CPI experienced its first monthly decline since 2020. Most forecasters indicate that the report released by the U.S. Bureau of Labor Statistics on Tuesday will show the preliminary effects of the punitive tariffs imposed on China and other countries last month, but the impact may be limited, as many imported goods on U.S. shelves last month arrived before the new tariffs took effect. Bank of America economists noted, "Due to the impact of tariffs and related consumer behavior, core goods inflation may accelerate." Bank of America also pointed out that the April data may only represent the calm before the "tariff storm" arrives. Economists and investors generally expect tariffs to significantly drive up inflation this summer, when U.S. corporate inventories are depleted, forcing them to sell a new round of goods at higher prices.

U.S.-China tariff war cools, traders bet on only two rate cuts by the Federal Reserve in 2025. With the U.S. and China reaching an agreement to lower tariffs and ease trade frictions, financial markets have significantly cooled their expectations for the Federal Reserve's rate cuts this year, predicting only two rate cuts for the entire year of 2025. Swap contracts tracking the Federal Reserve's meetings indicate that the market expects a cumulative rate cut of only 56 basis points by December, a significant drop from last week's 75 basis points. Although traders still generally believe that the first 25 basis point rate cut will occur in September, expectations for the overall rate cut magnitude in 2025 have clearly contracted. Wall Street's predictions for this year's rate cuts highlight the high uncertainty regarding the direction of monetary policyThe expected range given by economists from major investment banks varies from zero to as high as 100 basis points. Most large banks anticipate that the interest rate cut cycle will begin in July or September, with two to three cuts expected throughout the year. For example, Citigroup has pushed back its forecast for the next rate cut from June to July after the U.S. announced it would reduce tariffs on Chinese goods from 145% to 30% within 90 days. However, it expects rate cuts at every meeting from July to January next year, totaling 125 basis points. Goldman Sachs, on the other hand, expects the Federal Reserve to make its first rate cut in December (instead of the previously predicted July).

U.S. stocks are no longer "leading the pack"! JP Morgan warns: Three driving factors are weakening. JP Morgan pointed out that over the past 15 years since 2010, the U.S. stock market has shown significant excess returns compared to other global markets. However, since the beginning of this year, the "glory" of the past few years has not been replicated, and the performance of the U.S. stock market has significantly lagged behind other major markets. JP Morgan believes that three positive driving factors for the U.S. stock market may be changing: 1) Over 40% of the excess returns in the U.S. stock market come from the "seven giants," but in a world where artificial intelligence (AI) is gradually becoming mainstream, these tech giants may no longer be as unique. The risk is that the investment returns of the "seven giants" may be disappointing. There are also concerns about the high concentration of the U.S. stock market. Additionally, if the bank's judgment about the U.S. economy falling into recession is supported by more evidence, whether the "seven giants" will still perform like a structurally growing industry is uncertain. 2) The U.S. dollar has been strong for the past 15 years, but it may no longer be viewed as a safe-haven asset, especially in the context of narrowing real interest rate differentials and questions about the credibility of the Federal Reserve. If the dollar weakens, international markets typically perform better. 3) In recent years, U.S. economic activity has generally led other countries, but this lead may be diminishing due to its high fiscal deficit, while fiscal stimulus from Europe and China may be stronger.

U.S.-China trade negotiations ignite optimism! Goldman Sachs expects U.S. stocks to rise another 11%. The easing of U.S.-China trade tensions has driven a return to the "Buy America" trade, prompting Goldman Sachs to raise its target for U.S. stocks. Strategists at Goldman Sachs, including David Kostin, currently expect the S&P 500 index to reach 6,500 points in the next 12 months, up from the previous expectation of 6,200 points. The new forecast implies an approximately 11% increase from Monday's closing price. However, Goldman Sachs remains cautious. Goldman Sachs strategists stated, "The market's optimistic expectations for economic growth, along with uncertainties surrounding the extent of the slowdown in economic and corporate profit growth, may limit price-to-earnings ratios in the coming months." They added, "Although the growth outlook has improved recently, the tariff rates in 2025 may be much higher than in 2024, putting pressure on profit margins." Goldman Sachs advises investors to focus on stocks of companies with strong pricing power that can maintain profit margins amid rising input costs.

Is "oversupply" of crude oil inevitable? Crude oil demand has been sluggish this year, and inventories continue to accumulate. A recent commodity research report released by a team of analysts at JP Morgan shows that since the beginning of this year until early May, global crude oil demand has grown more weakly than expected year-on-year, and inventories continue to show an accumulation trajectory, indicating an "oversupply" from 2025 to 2026Expectations are continuing to ferment. The JP Morgan analyst team pointed out in a report: "The final data for global liquid fuel demand in the first quarter of 2025 is consistent with our forecast, with a year-on-year increase of 1.6 million barrels per day." "Preliminary data for April shows that consumption is basically flat compared to last year, but 500,000 barrels per day lower than our expectations. This weakness seems to have continued into early May."

Individual Stock News

UnitedHealth (UNH.US) plummets pre-market! CEO change, 2025 performance outlook suspended. UnitedHealth appointed Stephen Hemsley as the new CEO to succeed Andrew Witty, who previously announced his resignation. The company also suspended its performance outlook for 2025, noting that medical service activities continue to increase. Additionally, the company stated that the medical costs for many federal Medicare Advantage members in its insurance division remain higher than expected and added that the company will return to a growth trajectory next year. As of the time of writing, UnitedHealth's stock fell over 10% in pre-market trading on Tuesday.

Honda (HMC.US) expects tariffs to cause a 59% plunge in annual profits, delays electric vehicle investment plan in Canada. Honda reported weak fourth-quarter results, with profits far below expectations. Honda's fourth-quarter net sales were 5.36 trillion yen, a year-on-year decrease of 1.3%, compared to an estimate of 5.29 trillion yen; operating profit was 73.57 billion yen, a year-on-year decrease of 76%, far below the estimated 254.57 billion yen; net profit was 30.57 billion yen, a year-on-year decrease of 87%, also far below the estimated 151.56 billion yen. Honda stated that the impact of tariffs imposed by Trump and the strengthening yen offset the gains from demand for its hybrid models, expecting profits for this fiscal year to decline by 59% year-on-year, which means a reduction of 450 billion yen (3 billion USD) in annual profits. The company currently expects its operating profit for the fiscal year ending March 31, 2026, to reach 500 billion yen (approximately 3.4 billion USD), while the market estimates 1.35 trillion yen, compared to 1.21 trillion yen for the recently concluded fiscal year. Honda also expects net sales for this fiscal year to be 20.30 trillion yen, a year-on-year decrease of 6.4%, while the market estimates 21.59 trillion yen. Meanwhile, the company has decided to postpone its plan to establish a comprehensive electric vehicle value chain in Canada, announced on April 25 last year, by about two years. As of the time of writing, Honda's stock fell nearly 5% in pre-market trading on Tuesday.

JD.com (JD.US) releases first-quarter results: net profit attributable to shareholders of 10.89 billion yuan, a year-on-year increase of 52.73%. The financial report shows that JD Group achieved revenue of 301.1 billion yuan in the first quarter (same unit), a year-on-year increase of 15.8%; net profit attributable to ordinary shareholders of the company was 10.89 billion yuan, a year-on-year increase of 52.73%; basic earnings per share were 3.76 yuan.

Tencent Music (TME.US) shines in first-quarter results: net profit attributable to equity holders was 4.29 billion yuan, a year-on-year increase of 201.8%. The financial report shows that Tencent Music's total revenue in the first quarter was 7.36 billion yuan (1.01 billion USD), a year-on-year increase of 8.7%The net profit attributable to equity holders of the company was RMB 4.29 billion (USD 591 million), a year-on-year increase of 201.8%. The net profit attributable to equity holders of the company under non-International Financial Reporting Standards was RMB 2.12 billion (USD 293 million), a year-on-year increase of 24.6%. The diluted earnings per American Depositary Share were RMB 2.77. As of March 31, 2025, the total balance of cash, cash equivalents, time deposits, and short-term investments was RMB 37.67 billion (USD 5.19 billion). Among them, online music subscription revenue increased by 16.6% year-on-year to RMB 4.22 billion (USD 581 million). The number of online music paying users increased by 8.3% year-on-year to 122.9 million, with a net increase of 1.9 million quarter-on-quarter. The average monthly revenue per paying user increased from RMB 10.6 in the same period of 2024 to RMB 11.4.

Huya (HUYA.US) Q1 revenue and profit exceeded expectations. The financial report shows that Huya's Q1 revenue decreased by 0.2% year-on-year to USD 207.9 million, exceeding consensus expectations by USD 18.56 million; Non-GAAP earnings per ADS were USD 0.01, exceeding consensus expectations by USD 0.01. Q1 mobile MAU (monthly active users) reached 83.4 million, compared to 82.6 million in the same period last year. As of the time of writing, Huya's stock fell over 3% in pre-market trading on Tuesday.

Important Economic Data and Event Forecast

Beijing time 20:30 US April CPI

Earnings Forecast

Pre-market on Wednesday: Sony (SONY.US)