U.S. Stock Market Outlook | The three major stock index futures are mixed, with PPI data coming tonight

1. As of July 16 (Wednesday) before the US stock market opens, the three major US stock index futures are mixed. As of the time of writing, Dow futures are up 0.24%, S&P 500 futures are up 0.03%, and Nasdaq futures are down 0.13%.

1. As of the time of writing, the German DAX index is up 0.26%, the UK FTSE 100 index is up 0.21%, the French CAC 40 index is up 0.13%, and the Euro Stoxx 50 index is down 0.28%.

1. As of the time of writing, WTI crude oil is down 1.10%, priced at $65.79 per barrel. Brent crude oil is down 0.93%, priced at $68.07 per barrel.

Individual Stock News

June CPI performance is mixed, market awaits PPI data reaction. The core CPI month-on-month increase yesterday did meet the Federal Reserve's target, which is good news for policymakers, but it is not enough to support a rate cut in July. Interest rate swap data shows that traders believe there is a 62% probability that the Federal Reserve will cut rates by 25 basis points in September, and they expect nearly two cuts by the end of the year. In response, Nick Timiraos from the "New Federal Reserve News Agency" wrote that the June CPI data has limited impact on Federal Reserve policy, and rate cuts still require cautious observation. With this cautious sentiment, the US dollar index fluctuated but ultimately chose to rise. Today's US June PPI indicator is still worth our attention. The market currently expects the PPI year-on-year rate to record 2.5%, down from 2.6%, and the core year-on-year rate to be 2.7%, down from 3%. If it meets or exceeds expectations, the US dollar index may continue to rebound.

Who will be the next Federal Reserve Chair? Trump’s confidant Hassett emerges as the strongest candidate. According to informed sources, Kevin Hassett, currently serving as the Director of the National Economic Council (NEC), is leading the competition for the next Federal Reserve Chair, with another popular candidate being former Federal Reserve Governor Kevin Walsh. US Treasury Secretary Mnuchin is involved in the selection process and providing advice, but if others do not convince, he himself may also be considered for the position. At the same time, informed sources say that Federal Reserve Governor Waller is still seen as a dark horse. President Trump has publicly expressed dissatisfaction with current Federal Reserve Chair Powell multiple times, blaming high interest rate policies for hindering economic growth, and has repeatedly called for the Federal Reserve to cut rates. Trump has also made it clear that he expects the next Federal Reserve Chair to quickly initiate rate cuts, which is a more explicit condition than during his first term The risk of Powell's resignation increases, investors bet on long-term inflation rise and a steepening U.S. Treasury yield curve. U.S. President Trump has repeatedly called for Federal Reserve Chairman Powell to resign, prompting investors to begin portfolio protection against rising inflation risks. The reason is that if a more dovish Federal Reserve takes office, it could push prices up, leading creditors to demand higher returns to hold bonds. It is reported that bond investors are pricing in potential price pressures in the inflation market for the coming years. On Monday evening, the breakeven inflation rate reflected by U.S. 5-year Treasury Inflation-Protected Securities (TIPS) rose to 2.476%, a three-month high.

Trump: Tariffs on drugs and semiconductors may be imposed before August 1, with small country rates slightly above 10%. U.S. President Trump stated on Tuesday local time that tariffs on imported drugs are likely to be imposed by the end of this month, with semiconductor tariffs also moving forward. These measures may take effect simultaneously with the comprehensive "reciprocal" tariffs implemented on August 1. "We will probably start by the end of this month, setting a lower tax rate first, giving pharmaceutical companies about a year to relocate production, and then significantly increasing the tariffs," Trump said to reporters while returning from the Pittsburgh Artificial Intelligence Summit. He also revealed that the timeline for semiconductor tariffs is "similar," and that taxing chips is "easier to operate," but did not provide specific details.

Jensen Huang: China's AI is "world-class," and I really want to buy a Xiaomi car. On July 16, NVIDIA CEO Jensen Huang delivered his opening speech in Chinese for the first time at the third Chain Expo. He praised China's AI models as "world-class," emphasized the importance of the Chinese market, and promised that NVIDIA would continue to invest in China. He even changed from his signature leather jacket to a Tang suit. He pointed out that within the next decade, AI capable of understanding the physical world and executing tasks will emerge, which will disrupt traditional factory models, allowing humans and AI to work side by side to manufacture intelligent products, driving a new industrial revolution and creating growth opportunities. Interestingly, Huang also expressed strong interest in Xiaomi cars, stating, "I really hope to buy a Xiaomi car," and noted that the progress of Chinese electric vehicles in the past five years is "astonishing the world."

U.S. earnings season is coming! Hedge funds urgently adjust positions: cutting bank stocks and buying consumer staples. A Goldman Sachs report shows that ahead of this week's U.S. earnings season, hedge funds have sold bank stocks for the second consecutive week while buying consumer staples at the fastest pace in nearly two years. This week, the momentum of U.S. stocks reaching historical highs may face challenges as major banks begin to announce second-quarter earnings, and U.S. consumer price data for June is released on Tuesday. Data from Goldman Sachs' institutional brokerage division shows that last week, hedge funds sold long positions in major U.S. banks and global financial services companies for the second consecutive week. Goldman Sachs stated that these investors sold long positions in European financial stocks and increased short positions. It noted that banks, financial services companies, and insurance companies were net sold, while trading and consumer finance companies were net bought

Individual Stock News

Morgan Stanley (MS.US) reported Q2 net revenue of $16.79 billion, exceeding market expectations. Morgan Stanley's Q2 net revenue was $16.79 billion, estimated at $16.04 billion; Q2 earnings per share were $2.13; Q2 stock trading revenue was $3.72 billion, with market expectations of $3.53 billion; Q2 sales and trading revenue from fixed income, foreign exchange, and commodities was $2.18 billion, with market expectations of $2.11 billion.

Goldman Sachs (GS.US) Q2 stock trading revenue reached a record $4.3 billion. Goldman Sachs' Q2 stock trading revenue was $4.3 billion, setting a new historical high, exceeding expectations by $600 million and increasing by $100 million quarter-on-quarter; fixed income trading revenue was $3.47 billion, a record; investment banking fees surged to $2.19 billion, with financial advisory revenue increasing by 71% year-on-year, equity underwriting flat, and debt underwriting slightly down; asset and wealth management net revenue was $3.78 billion, with management fees up 11% year-on-year; total employees decreased by 700 to 45,900, with cost-cutting plans continuing.

Bank of America (BAC.US) Q2 EPS exceeded expectations at $0.89, maintaining full-year NII guidance of $15.5-15.7 billion. Bank of America's Q2 earnings per share were $0.89, higher than the expected $0.86; net interest income (FTE) was $14.8 billion, increasing for four consecutive quarters, with full-year Q4 guidance maintained at $15.5–15.7 billion; non-interest income was $11.8 billion. Credit provisions increased to $1.59 billion, with net charge-offs and delinquency rates remaining stable. Non-interest expenses were $17.2 billion, down $600 million quarter-on-quarter. Average deposits of $19.7 trillion and loans of $11.3 trillion both increased quarter-on-quarter, with personal banking income at $10.8 billion and global wealth client assets increasing by 10% year-on-year to $4.4 trillion. Global markets revenue was $6.03 billion, with sales and trading revenue excluding DVA at $5.3 billion, up 15% year-on-year, fixed income up 16% to $3.2 billion, and equities up 10% to $2.1 billion.

Despite the threat of Trump's drug tariffs! Johnson & Johnson (JNJ.US) Q2 performance exceeded expectations and raised full-year guidance. Johnson & Johnson's Q2 performance surpassed Wall Street expectations and raised full-year guidance, demonstrating confidence in growth amid dual threats of tariffs and drug price reductions in the pharmaceutical industry. The financial report showed that Johnson & Johnson's quarterly sales reached $23.7 billion, exceeding analysts' average expectation of $22.8 billion, with Q2 non-GAAP earnings per share at $2.77, exceeding market expectations by $0.09. Johnson & Johnson raised its 2025 revenue forecast median by $2 billion to $93.4 billion, and the full-year adjusted earnings per share forecast median was raised by $0.25 to a range of $10.80-10.90.

Competitor benchmarking NVIDIA! Broadcom (AVGO.US) launched the new Tomahawk Ultra network chip. Broadcom announced that its groundbreaking new network processor "Tomahawk Ultra" has begun mass production, designed specifically for high-performance computing and artificial intelligence applications. The company stated that the Tomahawk Ultra series products are optimized for tightly coupled, low-latency communication patterns present in high-performance computing (HPC) systems and artificial intelligence clusters According to the company, with ultra-low latency switching technology and adaptive optimized Ethernet header values, it can provide predictable and efficient performance for large-scale simulations, scientific computing, and synchronized artificial intelligence model training and inference.

ASML (ASML.US) sharply cuts growth expectations, stock price drops nearly 8% in pre-market. ASML announced its financial report, with CEO Christophe Fouquet citing trade disputes and global tensions as reasons for retracting the company's growth expectations for next year. Fouquet stated in the quarterly earnings report: "The uncertainty brought by macroeconomic and geopolitical developments continues to intensify. Therefore, while we are still preparing for growth in 2026, we cannot confirm it at this stage." ASML expects net sales in the third quarter to be between 7.4 billion and 7.9 billion euros (approximately 8.6 billion USD), lower than the average analyst estimate of 8.2 billion euros. The company maintains its expectation of a 15% revenue growth for the year. The financial report showed that the company received new orders of 5.5 billion euros in the second quarter, exceeding market expectations. However, ASML announced it will stop publishing quarterly order data starting next year, believing that this metric does not accurately reflect business momentum.

Rio Tinto (RIO.US) Q2 iron ore shipments fall short of expectations, copper production may reach guidance upper limit boosting confidence. On Wednesday, Rio Tinto Group announced that its second-quarter iron ore shipments increased less than expected, but it anticipates that copper production for the 2025 fiscal year will reach the upper limit of its guidance range. As the world's largest producer of steelmaking raw materials (iron ore), Rio Tinto's operations were hindered in the first quarter of this year due to frequent tropical cyclones, and its iron ore shipments are now gradually recovering. In the three months ending June 30, the group shipped 79.9 million tons of iron ore from the Pilbara region, a 13% increase from the previous quarter, but below the Visible Alpha consensus estimate of 81.98 million tons. During this period, the proportion of low-grade SP10 iron ore shipments from Rio Tinto increased, accounting for 29% of the total shipments from the Pilbara region.

Important Economic Data and Event Forecasts

Beijing time 20:30: U.S. June PPI year-on-year (%).

Beijing time 21:15: U.S. June industrial production month-on-month (%).

Beijing time 22:30: U.S. EIA crude oil inventory change for the week ending July 11 (10,000 barrels).

Beijing time 20:00: 2027 FOMC voting member, Richmond Fed President Barkin speaks.

Beijing time 21:15: 2026 FOMC voting member, Cleveland Fed President Mester speaks.

Beijing time 22:00: Federal Reserve Governor Barr speaks on financial regulation at the Brookings Institution.

To be determined: NVIDIA CEO Jensen Huang holds a media briefing in Beijing.

To be determined: 2027 FOMC voting member, Richmond Fed President Barkin speaks.

Next day Beijing time 02:00: Federal Reserve releases the Beige Book on economic conditions.

Next day Beijing time 05:30: FOMC permanent voting member, New York Fed President Williams speaks on the U.S. economy and monetary policy

Earnings Forecast

Thursday morning: Alcoa (AA.US)

Thursday pre-market: TSMC (TSM.US), Novartis (NVS.US), Abbott (ABT.US), PepsiCo (PEP.US), GE Aerospace (GE.US)