U.S. Stock Market Outlook | Three Major Index Futures Mixed, Tesla and IBM Drop After Earnings

Pre-Market Market Trends

1. As of July 24 (Thursday), U.S. stock index futures are mixed before the market opens. As of the time of writing, Dow futures are down 0.38%, S&P 500 futures are up 0.13%, and Nasdaq futures are up 0.33%.

1. As of the time of writing, the German DAX index is up 0.57%, the UK FTSE 100 index is up 0.97%, the French CAC 40 index is up 0.00%, and the Euro Stoxx 50 index is up 0.42%.

1. As of the time of writing, WTI crude oil is up 0.77%, priced at $65.75 per barrel. Brent crude oil is up 0.61%, priced at $68.93 per barrel.

Market News

Is the nightmare of the internet bubble repeating? Smead Capital warns: Current U.S. stock valuations have reached the "death line." Bill Smead, Chief Investment Officer of asset management company Smead Capital Management, has issued a warning that current U.S. stock valuations have reached the "death line," a dangerous level last seen during the peak of the internet bubble. Smead pointed out that inflation-adjusted price-to-earnings ratios have reached levels seen during the internet bubble. The top ten companies by market capitalization—Nvidia, Microsoft, Apple, Amazon, Google, Meta, Broadcom, Tesla, Berkshire, and JP Morgan—are valued even more expensively than during the peak of the bubble. Additionally, Smead specifically noted that the residential builders sector is quite attractive for investment in the current market environment.

The Trump administration has officially released the "AI Action Plan"! Focusing on three pillars: innovation, infrastructure, and international diplomacy and security. The Trump administration has officially released the "AI Action Plan," which centers on three core pillars: innovation, infrastructure, and international diplomacy and security. This strategic document aims to accelerate the development of artificial intelligence and enhance the United States' dominant position in global technological competition. Trump stated in the document: "Breakthroughs in these areas have the potential to reshape the global power landscape, create new industries, and fundamentally change the way we live and work. We must fully unleash the potential of American innovation to ensure our dominance in the global technology arena is unquestionable and unchallengeable." The White House stated that the U.S. must push AI technology development and application faster and more comprehensively than global competitors in every field while dismantling unnecessary regulatory barriers that hinder private sector development. Specifically, the three core pillars of the "AI Action Plan" are: accelerating AI innovation, building U.S. AI infrastructure, and playing a leadership role in international AI diplomacy and security The key policies in this action plan include: promoting AI exports, accelerating the construction of data centers and semiconductor factories, and reducing regulatory barriers.

In addition to tariffs, the Federal Reserve must also be wary of the "strange" dollar. The U.S. economy is facing a tariff shock not seen in about 80 years. Due to the lack of recent precedents, it is wise for the Federal Reserve to pause interest rate cuts until it has solid evidence that consumer prices are not soaring. However, analyst Jonathan Levin states that there is another reason to proceed with caution during this uncertain time: the extremely unusual performance of the dollar. Many economists had predicted that the dollar would strengthen when Trump implemented tariffs. This so-called currency offset effect is a key basis for their belief that the new tariffs would not necessarily be passed on to consumers, at least not fully. But confusingly, the dollar has actually weakened. Since the announcement of the "Liberation Day" tariffs on April 2, the dollar index has fallen by 6.8%, with a cumulative decline of about 10.4% in 2025, marking the worst annual start in at least 25 years. Predictions indicate that the dollar may further depreciate over the next year. Theoretically, this could put greater upward pressure on U.S. consumer prices than simple tariffs would. Given this uncertainty, the approach of waiting for data guidance, as Powell does, is prudent—policymakers should not indirectly weaken the exchange rate through interest rate cuts until they are confident that consumer prices will not continue to rise. However, this has infuriated Trump, who absurdly insists that tariffs can be implemented while quickly cutting interest rates.

Has Trump's "trump card" finally been revealed? Japan has entered the game, and a 15% tariff may become the new norm! Trump's efforts to introduce new global trade standards are becoming increasingly clear, as U.S. and EU officials are negotiating a possible agreement on a 15% tariff, following a similar agreement reached with Japan. These two developments mark a turning point in the months-long global trade negotiations that have left investors and major U.S. trading partners uncertain. Progress with Japan and the EU brings some clarity to businesses and the global economy, which have delayed major investments and decisions amid Trump's erratic tariff statements and uncertainty over whether countries can reach trade agreements with this administration. Brett Ryan, a senior U.S. economist at Deutsche Bank, stated, "With these framework agreements in place, the risk of a more destructive, tit-for-tat trade conflict is eliminated." However, economists warn that higher tariffs will raise prices for U.S. consumer goods. This could put pressure on the U.S. domestic economy, which has shown resilience so far in Trump's trade conflicts.

Individual Stock News

Cloud business surges 32%! Google (GOOGL.US) invests $85 billion to ramp up AI infrastructure, forecasts spending will increase in 2026. For the second quarter ending June 30, Google's total revenue reached $96.43 billion, exceeding analysts' average expectation of about $94 billion; earnings per share were $2.31, also higher than the expected $2.18. Notably, Google's cloud business sales surged nearly 32% year-on-year, far exceeding the growth expectation of 26.5%, becoming the main engine driving revenue growth. Additionally, the company announced it would raise its annual capital expenditure plan to about $85 billion and forecast continued increases in investment next year, stating that this decision stems from strong demand for its cloud computing services As of the time of publication, Google rose over 3% in pre-market trading on Thursday.

Tesla (TSLA.US) Q2 performance declines in both metrics, Musk warns of "poor performance in the coming quarters," heightening concerns. Tesla's latest second-quarter financial report shows that its core financial indicators have declined for the second consecutive quarter. The company's total revenue for the quarter fell 16% year-on-year to $22.5 billion, below analysts' expectations of $22.74 billion; adjusted earnings per share were $0.40, also missing the market expectation of $0.43. The automotive business, as the core segment, saw revenue shrink from $19.9 billion in the same period last year to $16.7 billion, with revenue from regulatory credit sales dropping from $890 million to $439 million, becoming a significant drag on performance. Previously, the company's CEO Elon Musk had warned of "potentially poor performance in the coming quarters," and CFO Vaibhav Taneja's further statements during the earnings call intensified market concerns. He revealed that a bill recently passed by the U.S. Congress will eliminate the $7,500 federal tax credit for electric vehicles by the end of the third quarter, which will directly impact Tesla's business; at the same time, the company needs to adjust its supply chain to cope with the tariff policies of the Trump administration. As of the time of publication, Tesla fell nearly 6% in pre-market trading on Thursday.

IBM (IBM.US), despite the halo of AI and quantum computing, fails to deliver impressive results, as the market returns to rationality from "tech frenzy." The financial report shows that IBM's total sales in the second quarter increased by 8% year-on-year to $17 billion, surpassing analysts' average expectation of about $16.6 billion. This performance was largely driven by IBM's infrastructure business unit, rather than its long-focused software and consulting business units. The infrastructure business unit's sales grew by 14% in the second quarter to $4.14 billion, exceeding analysts' expectations of $3.66 billion. Meanwhile, the company's software division saw sales increase by 10% year-on-year to $7.39 billion, slightly below analysts' average expectation of $7.49 billion; another major pillar business—consulting—had already shown a significant slowdown in growth in the previous quarter, with second-quarter sales only increasing by 3% to $5.31 billion. In terms of earnings, the adjusted earnings per share for the second quarter were $2.80, higher than analysts' average expectation of $2.62. IBM's management continues to maintain its full-year sales growth expectation of at least 5% at constant exchange rates, which is generally in line with Wall Street expectations. Free cash flow is expected to exceed $13.5 billion, also consistent with Wall Street estimates. As of the time of publication, IBM fell over 6% in pre-market trading on Thursday.

Aggressive marketing strategy pays off! T-Mobile US (TMUS.US) Q2 user growth crushes expectations, raises full-year performance guidance. The second-largest wireless carrier in the U.S., T-Mobile US, reported that despite a poor start to the year, the number of new users in the second quarter far exceeded analysts' expectations. The company, headquartered in Bellevue, Washington, announced on Wednesday that it added 830,000 postpaid phone users in the quarter, significantly higher than Wall Street's expectation of 714,000. Service revenue, excluding user device purchases and upgrades, grew by 6% year-on-year to $17.4 billion, slightly exceeding market expectations Total revenue reached $21.13 billion, slightly above analysts' expectations of $21.02 billion, with diluted earnings per share rising 14% to $2.84, better than the analysts' forecast average of $2.69. As consumers increasingly focus on the cost-effectiveness of communication spending, the three major telecom operators in the United States are engaged in a fierce battle for users. With aggressive marketing strategies and value-added services, T-Mobile continues to expand its competitive advantage in the market. As of the time of writing, T-Mobile US rose over 4% in pre-market trading on Thursday.

Weak dollar and tariffs drag down "double whammy," Nokia (NOK.US) Q2 profits plunge 29%. Affected by tariffs and the impact of a weaker dollar, 5G equipment manufacturer Nokia reported poor performance in the second quarter. The report showed a slight revenue increase of 2% to €4.55 billion, falling short of market average expectations, with adjusted operating profit at €301 million (approximately $354 million), down 29% from €423 million in the same period last year, far below analysts' average expectation of €399 million. The company is currently facing a series of challenges, including tariff threats and exchange rate fluctuations. The company previously announced a downward revision of its full-year operating profit forecast to €1.6 billion to €2.1 billion, down from a previous high of €2.4 billion. As of the time of writing, Nokia fell nearly 2% in pre-market trading on Thursday.

Deutsche Bank (DB.US) Q2 net profit of €1.485 billion turns profitable, achieving the best half-year performance since 2007. Deutsche Bank reported a net profit of €1.485 billion (approximately $1.75 billion) in the second quarter, turning a profit compared to a loss of €143 million in the same period last year, exceeding analysts' expectations of €1.2 billion. Revenue for the quarter was €7.804 billion, roughly in line with market expectations. This performance was driven by strong results in fixed income and foreign exchange trading, offsetting the impact of euro appreciation and declines in some traditional businesses. Deutsche Bank's profits in the first half of the year reached the highest level since 2007. CEO Christian Sewing stated that the current performance "gives us hope to achieve our 2025 goals," referring to it as a "year of consolidation" — the bank is advancing its three-year plan and beginning to set financial targets for 2026. CFO James von Moltke emphasized in an interview that the momentum of business development is "very encouraging," expressing confidence in cost control and achieving targets. As of the time of writing, Deutsche Bank rose over 6% in pre-market trading on Thursday.

Decline in German business temporarily eases, aiding Vodafone (VOD.US) Q1 revenue and profit growth. Data shows that the company's total revenue in Q1 grew by 3.9% to €9.4 billion; adjusted EBITDA increased to €2.7 billion, with profit margins slightly above analysts' expectations. Vodafone's business in its largest market, Germany, has begun to show signs of stabilization. Previously, intense competition and regulatory changes led the company to lose millions of customers. Vodafone's organic service revenue in Germany fell by 3.2% to €2.7 billion ($3.2 billion) in the first quarter, with analysts previously expecting a decline of 4.6%. This drove Vodafone's total organic service revenue growth to 5.5%, better than the market expectation of 4.9%. Vodafone maintains its full-year profit and adjusted free cash flow guidance at €2.4 billion to €2.6 billion As of the time of publication, Vodafone rose over 3% in pre-market trading on Thursday.

The oil and gas winter severely impacted Total (TTE.US), with Q2 profits plummeting 23%. Affected by falling oil and gas prices, the company's second-quarter profits declined, while net debt surged significantly. Q2 adjusted net profit fell from $4.7 billion in the same period last year to $3.6 billion, a year-on-year decrease of 23.4%, and down 14% from $4.2 billion in the first quarter of this year, in line with analyst consensus expectations. Although upstream production increased, it failed to offset the recent sharp drop in oil and gas prices. Due to increased merger and acquisition expenditures and rising working capital needs, the company's net debt grew by 29% from the previous quarter to $25.93 billion. Total confirmed that it will continue to execute a $2 billion stock repurchase plan in the third quarter and expects oil and gas production to increase by 3% year-on-year in the next quarter. However, the company disclosed on Thursday that it only repurchased $1.7 billion in stock during the three months ending in June. The full-year net investment for 2025 is still expected to remain in the range of $17 billion to $17.5 billion, consistent with previous plans. As of the time of publication, Total fell 3% in pre-market trading on Thursday.

Under the shadow of tariffs, Southwest Airlines (LUV.US) Q2 performance fell short of expectations, slashing annual profit forecasts by $1 billion. Data shows that the company's second-quarter revenue was $7.24 billion, slightly below the expected $7.3 billion; adjusted earnings per share were $0.43, lower than the analyst expectation of $0.53. Southwest Airlines expects that economic turmoil this year will consume up to $1 billion of its annual pre-tax profit, prompting the U.S. airline to significantly lower its 2025 shareholder earnings forecast. The company mentioned in a statement that the 2025 earnings before interest and taxes (EBIT) is expected to be between $600 million and $800 million. Earlier this year, Southwest Airlines originally expected annual pre-tax profits to reach $1.7 billion. As one of the few companies quantifying the impact of the Trump administration's global trade policy adjustments, inflation, and economic uncertainty, Southwest Airlines' performance has been under pressure for some time; earlier this year, these factors led to a sharp decline in travel demand. Most airlines withdrew their financial guidance in April, stating that the demand outlook had become unpredictable. The statement noted that domestic leisure travel, which is the core business of Southwest Airlines, stabilized in the second quarter, with "recent trends showing signs of improvement." As of the time of publication, Southwest Airlines fell over 2% in pre-market trading on Thursday.

Important Economic Data and Event Forecasts

Beijing time 20:30 Initial jobless claims in the U.S. for the week ending July 19

Beijing time 21:45 U.S. July SPGI Manufacturing PMI preliminary value

Beijing time 22:00 U.S. June seasonally adjusted new home sales annualized total

Earnings Forecast

Friday morning: Intel (INTC.US), Newmont Corporation (NEM.US)