U.S. Stock Outlook | Three major stock index futures all fell, Moody's downgraded the U.S. rating, and the 30-year U.S. Treasury yield rose to 5%

1. On May 19th (Monday) before the US stock market opened, the three major US stock index futures all fell. As of the time of writing, Dow futures were down 0.67%, S&P 500 futures were down 1.14%, and Nasdaq futures were down 1.52%.

1. As of the time of writing, the German DAX index was down 0.02%, the UK FTSE 100 index was down 0.44%, the French CAC40 index was down 0.71%, and the Euro Stoxx 50 index was down 0.71%.

1. As of the time of writing, WTI crude oil was down 1.05%, priced at $61.32 per barrel. Brent crude oil was down 1.10%, priced at $64.69 per barrel.

Market News

Moody's downgrade causes shock! 30-year US Treasury yield rises to 5%, "Sell America" trade returns. Moody's downgrade of the US sovereign credit has intensified concerns about US debt, with long-term US Treasury yields briefly rising to the psychological level of 5%, and US stock index futures following the dollar down. Moody's announced last Friday that it had downgraded the US government's top credit rating from Aaa to Aa1. The company attributed the ever-expanding US budget deficit to successive presidents and congressional members, stating that there are almost no signs of narrowing the budget deficit. This downgrade may exacerbate Wall Street's concerns about the US sovereign bond market. Currently, the US Congress is discussing more tax cuts without funding support, and with President Donald Trump overturning long-established business partnerships and renegotiating trade agreements, the US economy seems poised to slow down.

Is it time to buy US stocks on dips? Morgan Stanley: The US-China tariff truce reduces recession risks, and the downgrade may be a good entry point. Morgan Stanley strategist Michael Wilson stated that investors should buy any US stocks that fell due to last Friday's credit rating downgrade, as the trade truce with China reduces the likelihood of an economic recession. The strategist believes that after Moody's downgrade pushed the 10-year US Treasury yield above the critical 4.5% level, the likelihood of a market pullback has increased. However, Wilson wrote in a report, "We will buy on dips." S&P 500 futures fell 1.2% on Monday, following Moody's downgrade of US debt ratings, with Moody's stating that this move was in response to the expanding budget deficit, which showed almost no signs of narrowing. This has reignited investor concerns about whether US assets remain attractive amid ongoing global trade uncertainties Trump's Tax Cut Bill Advances in the House. According to reports, Trump's tax cut bill has received approval from a key committee in the U.S. House of Representatives, making it likely to pass in the House later this week. The bill is reportedly worth trillions of dollars. Last Thursday, efforts to pass the bill in Congress faced obstacles as five hardline conservatives within the Republican Party voted against it alongside all Democratic lawmakers, as the hardliners demanded further cuts to the Medicaid program in exchange for their support in a crucial procedural vote. Republican leadership stated that the bill is not yet mature, and significant revisions to the tax and Medicaid provisions are needed to gain conservative support.

Goldman Sachs Sounds Alarm on Dollar Depreciation: Tariffs Erode "American Exceptionalism." Goldman Sachs' research department predicts that the dollar will face depreciation due to trade tensions, policy uncertainty, and a slowdown in U.S. economic growth, which are putting pressure on investor confidence and foreign demand for U.S. assets. Goldman noted, "The weakening of the dollar against major currencies is expected to continue into the first quarter of 2025." "We previously pointed out that U.S. assets have exceptional return prospects, which is the fundamental reason for the strong valuation of the dollar. However, if tariffs compress U.S. corporate profit margins and reduce real incomes for American households, this 'American exceptionalism' may be eroded." Goldman predicts that the dollar will fall 10% against the euro and 9% against the yen and the pound. The report indicates that market sentiment towards U.S. assets is deteriorating due to "overseas consumers boycotting American products," which poses a slight but persistent drag on GDP.

Is the Golden Age of U.S. Stocks Coming to an End? Wall Street Giants Turn to Bet on Emerging Markets: The Next Bull Market is Coming. Investors in emerging markets on Wall Street, after years of missing out on the surge in the U.S. stock market, are finally seeing opportunities. Companies like Morgan Stanley Investment Management, AQR Capital Management, Bank of America, and Franklin Templeton are betting that the situation may eventually turn favorable for emerging market stocks. Michael Hartnett of Bank of America refers to it as "the next bull market." AQR predicts that over the next 5 to 10 years, these markets will see annual returns close to 6% in local currency terms, surpassing the 4% increase of the U.S. stock market in dollar terms. Despite a rebound in the S&P 500 index in recent weeks, as of last Friday's close, the index is flat for the year, while the emerging market index has risen by 10%. This surge has ignited hopes that the dismal performance of emerging markets over the past 15 years may come to an end.

Individual Stock News

Sohu (SOHU.US) Q1 Total Revenue of $136 Million, Net Loss Narrowed by Over 20% Year-on-Year. In the first quarter of 2025, Sohu's total revenue was $136 million. Of this, marketing services revenue was $14 million, and online gaming revenue was $117 million. The non-GAAP net loss attributable to Sohu was $16 million, compared to a net loss of $22 million in the same period of 2024, representing a year-on-year narrowing of over 20%. According to Sohu's previously announced American Depositary Share repurchase plan, with a total amount of up to $150 million, as of May 15, 2025, Sohu has repurchased 5.48 million Sohu American Depositary Shares, totaling approximately $67 million Niu Technologies (NIU.US) reports Q1 revenue growth of 35.1% year-on-year to 682 million yuan. Niu Technologies achieved revenue of 682 million yuan in the first quarter, a year-on-year increase of 35.1%, showing rapid growth; the number of domestic stores has increased to 4,119, and the overseas sales network has covered 53 countries; global vehicle sales exceeded 203,000 units, a significant year-on-year increase of 57.4%, setting a historical high for the same period. Looking ahead, based on the dual support of the sales peak season and the release of new products, Niu Technologies is confident in market demand, and the company expects second-quarter revenue to be between 1.317 billion yuan and 1.411 billion yuan, corresponding to a year-on-year growth of 40% to 50%.

Jensen Huang's Computex speech ignites AI storm: Next-generation GB300 system to launch in Q3, new RTX Pro servers online. On Monday, NVIDIA (NVDA.US) CEO Jensen Huang delivered a keynote speech at Computex, Asia's largest electronics show, promoting new products and strengthening cooperation with Taiwan. The company launched its latest series of technologies aimed at sustaining the demand boom in artificial intelligence computing and ensuring its products remain at the core of the industry. Jensen Huang introduced updates to the ecosystem surrounding NVIDIA's accelerated chips, which are central to developing and running AI services. The core goal is to expand the coverage of NVIDIA's products and eliminate more barriers for industries and countries adopting AI technology. Jensen Huang first announced the latest timeline for NVIDIA's next-generation GB300 system, stating that it will be launched in the third quarter of this year.

Worrying outlook! Apple (AAPL.US) reportedly faces significant setbacks in the AI field. According to media reports citing sources familiar with Apple's internal discussions, Apple's ongoing struggles in the artificial intelligence (AI) field could undermine its dominant position in the smartphone market and jeopardize the company's broader ambitions, from robotics to next-generation hardware. Despite a high-profile personnel appointment in 2018 that once sparked expectations for its AI strategy, the tech giant's path in AI now faces serious obstacles. In 2018, Apple hired former Google (GOOGL.US) executive John Giannandrea to lead its AI strategy. This appointment was seen as a key turning point, especially against the backdrop of Siri lagging far behind competing voice assistants.

Important Economic Data and Event Forecasts

Beijing time 22:00: U.S. Conference Board Leading Economic Index month-on-month (%) for April.

Beijing time 23:30: U.S. May 19 six-month Treasury bill auction - total amount (billion USD).

Beijing time 20:30: 2027 FOMC voting member and Atlanta Fed President Bostic attends the Atlanta Fed 2025 Financial Markets Conference and delivers the opening speech.

Beijing time 20:45: Federal Reserve Vice Chair Jefferson speaks, FOMC permanent voting member and New York Fed President Williams speaks Beijing time 22:00: U.S. President Trump spoke successively with Russian President Putin, Ukrainian President Zelensky, and NATO member countries.

The next day at 01:15 Beijing time: 2026 FOMC voting member and Dallas Federal Reserve President Logan hosted a panel discussion at the Atlanta summit.

Earnings Forecast

Tuesday morning: Trip.com (TCOM.US), Yalla Technology (YALA.US)

Tuesday pre-market: Home Depot (HD.US), Huazhu (HTHT.US), Bilibili (BILI.US), Vipshop (VIPS.US), Pony.ai (PONY.US), GDS Holdings (GDS.US), Canaan Inc. (CAN.US)