U.S. Stock Market Outlook | Three Major Index Futures Rise Together, Tech Giants' Earnings Reports Hit This Week

Pre-Market Market Trends

1. As of July 21 (Monday), U.S. stock index futures are all up before the market opens. As of the time of writing, Dow futures are up 0.21%, S&P 500 futures are up 0.23%, and Nasdaq futures are up 0.24%.

1. As of the time of writing, the German DAX index is down 0.06%, the UK FTSE 100 index is down 0.08%, the French CAC 40 index is down 0.37%, and the Euro Stoxx 50 index is down 0.40%.

1. As of the time of writing, WTI crude oil is up 0.02%, priced at $66.06 per barrel. Brent crude oil is down 0.12%, priced at $69.20 per barrel.

Market News

S&P and Nasdaq approach historical highs, "Seven Giants" earnings reports will set the tone for U.S. stocks. The S&P 500 index and the Nasdaq Composite index are both hovering near historical highs, despite escalating tariff disputes and debates over monetary policy, the market remains stable. Last week, the Nasdaq led with a 1.6% increase, the S&P 500 rose by 0.7%, while the Dow Jones Industrial Average remained basically flat. The second-quarter earnings season kicked off with major banks exceeding expectations, followed by impressive results from streaming giant Netflix, both indicating strong resilience in U.S. consumer spending. In the coming week, 112 S&P 500 constituent stocks will announce their quarterly reports, with market focus on tech giants such as Alphabet (GOOGL.US) and Tesla (TSLA.US). Evercore ISI's head of equity derivatives strategy, Julian Emanuel, warned that after a 30% rebound from the April lows, the S&P 500's price-to-earnings ratio has reached 24.7 times, meaning that even strong earnings can only maintain current high levels, and any slight miss could trigger a significant pullback. Alphabet and Tesla will kick off the quarterly earnings reports for the "Seven Giants" tech stocks. This batch of stocks is expected to lead the S&P 500's earnings growth this quarter. The "Seven Giants" are projected to see a 14.1% year-over-year increase in earnings for the second quarter, while the remaining 493 stocks in the index are expected to see only a 3.4% year-over-year increase in earnings. This means that the likelihood of the S&P 500 exceeding earnings expectations largely depends on the performance of large tech companies. Economic data will also include indicators of manufacturing and service sector activity, while the Federal Reserve has entered a quiet period ahead of its policy meeting on July 29-30 The U.S. Earnings Season Faces a "Zero Tolerance" Dilemma: Meeting Expectations is Just Passing, High Valuations Become Wall Street's "Tightening Spell." The earnings season is in full swing, but Wall Street has conveyed a clear message to companies: merely "performing well" is no longer enough. Major banks like JP Morgan and Bank of America reported solid results and conveyed a message of consumer resilience, yet their stock prices saw limited gains by the end of last week. Currently, Netflix (NFLX.US), with a price-to-earnings ratio of about 40 times, faced a more severe market reaction. Despite the streaming giant reporting revenue and profits that exceeded expectations and raising its full-year guidance, its stock price still fell 5% last Friday. William Blair analyst Ralph Schackart wrote in his comments on Netflix's earnings report: "Overall 'good' performance and guidance are not good enough for already elevated expectations." This disconnect between performance and stock price reaction is not an isolated case. As the earnings season progresses, the overall market is facing the issue of high valuations, and there is an increasing awareness that even strong performance may not be sufficient to justify current stock price levels.

New Highs in U.S. Stocks Hide Concerns! Weakening Momentum May Signal a Peak in the Rally. Currently, the U.S. stock market is near historical highs, as the market generally believes that the U.S. economy remains robust under Trump's tariff policies, and inflation remains moderate. However, beneath the surface of the U.S. stock market continuously hitting historical highs this month, there are already signs that this rally is losing momentum. The S&P 500 index has not seen a single-day fluctuation of 1% for 17 consecutive trading days, marking the longest period of relative calm since last December. Matt Maley, chief market strategist at Miller Tabak, believes that this reduction in volatility indicates that after a strong rebound from the lows caused by tariffs in April, market momentum is weakening. Other signs also indicate that momentum is waning. Dan Greenhaus, chief market strategist at Solus Alternative Asset Management, pointed out that the proportion of S&P 500 constituents above their 20-day or 50-day moving averages has recently declined, suggesting that this rally may be losing steam. Matt Maley stated that in the context of continuous news about the Federal Reserve Chair position and President Trump's trade war over the past few weeks, investors seem to be growing weary of waiting for more stocks to join the tech-led rally in the U.S. stock market. He said, "Whenever a narrow rally starts to lose momentum, it usually means investors begin looking for broader signs of an uptrend. When they don't see those signs, they often temporarily withdraw from the market."

Rumors of Trump Firing Powell Shake the Market, Investors Position for "Steepening Trades" to Hedge Risks. Last Monday, news that "President Trump may fire Federal Reserve Chair Powell" caused a stir in global markets. At this critical moment, Citrini Research analyst James Van Gelderen quickly issued a "macro trade" alert to about 50,000 clients, proposing a simple strategy: buy two-year U.S. Treasuries while selling ten-year U.S. Treasuries The logic behind this operation is that if the new Federal Reserve Chairman is more inclined to accommodate Trump's interest rate cut demands, short-term bond yields may decline due to expectations of policy easing; however, concerns about the weakening independence of the central bank may push up long-term inflation expectations, thereby raising long-term bond yields. It is noteworthy that this expectation was quickly validated after Powell's subsequent speech, with market fluctuations even exceeding initial predictions. Although Trump later denied the related plans, some market reactions reversed, but investors like Van Gelderen still adhered to their original strategies, believing that this risk, once deemed "unimaginable," is gradually becoming a real threat.

Wells Fargo exposes the "data lie," 60-year pattern suggests a crisis is approaching! In a recent report, Wells Fargo pointed out that behind seemingly optimistic U.S. economic data lies a "frightening" signal of recession—non-essential consumer spending on services is declining, and this indicator has only shown a decline during or immediately following economic recessions over the past 60 years. This finding sharply contrasts with the mainstream narrative on Wall Street, which generally believes that "reciprocal tariffs have not significantly impacted the economy." Wells Fargo economists Tim Quinlan and Shannon Grein noted in a recent report that the claim of "mild tariff impacts" is a "false narrative." They found that consumer spending data has been significantly revised down from earlier optimistic figures, with service spending growth revised down from an initially reported 2.4% to just 0.6%. More alarmingly, this downward trend continued into the second quarter. While non-essential goods consumption remained stable, service spending fell 0.3% year-on-year as of May. "Although the decline is not large, the frightening part is that this indicator has only decreased during or just after recessions over the past 60 years," the two economists warned. Wells Fargo emphasized: "Consumer spending is far less robust than we originally thought—even less than what was initially reported. While a stable labor market may offset inflation caused by tariffs, consumer behavior patterns have already changed."

Individual Stock News

Verizon (VZ.US) Q2 earnings exceed expectations, raises full-year profit and free cash flow guidance. The financial report shows that Verizon's Q2 revenue grew 5.2% year-on-year to $34.5 billion, better than the analyst expectation of $33.7 billion; adjusted earnings per share were $1.22, up from $1.15 in the same period last year, also better than the analyst expectation of $1.19. The company raised its profit guidance for 2025, expecting adjusted earnings per share to grow by 1%-3%, with the midpoint of this forecast at 2%, higher than the analyst expectation of 1.7%. Additionally, the company raised its free cash flow guidance for 2025 to $19.5 billion-$20.5 billion, up from the previous $17.5 billion-$18.5 billion—this is a key metric of interest for investors, as the stock's appeal mainly comes from generous dividends supported by cash flow. However, the number of customers opting out of phone contracts in the second quarter exceeded expectations, likely because cheaper phone contracts became more attractive as many worried about potential rising inflation. As of the time of writing, Verizon's stock rose over 4% in pre-market trading on Monday Microsoft (MSFT.US) vulnerability triggers global security crisis! Over 10,000 enterprise servers at risk. Microsoft server software is under attack from unknown hackers, and cybersecurity analysts warn of potential large-scale security vulnerabilities worldwide. Microsoft stated that it has released a new security patch for SharePoint servers "to mitigate active attacks on on-premises servers" and is deploying more fixes. The U.S. Cybersecurity and Infrastructure Security Agency confirmed the existence of the vulnerability, noting that hackers could exploit it to access file systems, internal configurations, and execute code over the network. Censys researcher Silas Carter estimated that over 10,000 enterprises using SharePoint servers globally are at risk, with the highest number of affected companies in the U.S., followed by the Netherlands, the UK, and Canada.

U.S. tariffs hit hard! Stellantis (STLA.US) expected to lose €2.3 billion in the first half of the year. Stellantis announced on Monday that its global vehicle shipments for the second quarter are estimated at 1.4 million units, a year-on-year decrease of 6%. This shipment data reflects production halts caused by tariff issues in North America at the beginning of the quarter, as well as adverse effects from product transitions in Europe. Stellantis also released preliminary financial data for the first half of 2025, expecting net revenue of €74.3 billion and a net loss of €2.3 billion. According to Stellantis's statement, the early impact of U.S. tariffs includes a net tariff expense of $300 million and production losses related to the company's response plans. Stellantis is currently taking early actions to improve performance and profitability, expecting new products to bring greater benefits in the second half of the year. Stellantis will release its complete financial results for the first half of 2025 on July 29.

BP (BP.US) undergoes leadership change in crisis: appoints former CRH CEO to steer the company, restarts strategic calibration under pressure from activist investors. BP announced on Monday the appointment of former CRH (CRH.US) CEO Albert Manifold as the new chairman. BP is currently struggling to advance a major strategic transformation, attempting to reverse its sluggish stock price. Manifold has not held senior positions in the energy sector before and will succeed Helge Lund starting in October. Currently, BP is cutting spending on renewable energy plans while facing ongoing market speculation about acquisitions and spin-offs. During his 11 years at CRH, Manifold drove the Irish company to restructure its asset portfolio and moved its primary listing to New York in 2023, during which the company's stock price soared nearly fourfold. Morningstar analyst Allen Good stated, "BP is embarking on a similar transformation path, and Manifold's experience may greatly benefit both him and the company."

Earnings Forecast

Tuesday morning: NXP (NXPI.US)

Tuesday pre-market: Coca-Cola (KO.US), General Motors (GM.US)