U.S. Stock Market Outlook | Three Major Index Futures Rise Together, U.S. and Europe Reach 15% Tariff Agreement, "Super Week" Approaches

1. On July 28 (Monday) before the U.S. stock market opened, the three major U.S. stock index futures rose together. As of the time of writing, Dow futures were up 0.07%, S&P 500 futures were up 0.20%, and Nasdaq futures were up 0.37%.

1. As of the time of writing, the German DAX index was down 0.11%, the UK FTSE 100 index was down 0.15%, the French CAC40 index was up 0.24%, and the Euro Stoxx 50 index was up 0.50%.

1. As of the time of writing, WTI crude oil was up 1.86%, priced at $66.44 per barrel. Brent crude oil was up 1.73%, priced at $68.83 per barrel.

Market News

"Super Week" is coming! Federal Reserve decision + four tech giants' earnings reports + non-farm payrolls, the U.S. stock market will face a "judgment moment" that sets the tone for the second half of the year. Wall Street professionals are closely watching the upcoming key week, which is likely to set the tone for the U.S. stock market and economic direction for the remainder of the year. The primary event will be the conclusion of the Federal Reserve meeting on Wednesday. Although a rate cut is not expected at this meeting, traders and investors will carefully analyze the meeting comments for clues about future policy directions. Following that, a large number of tech giants will release their earnings reports, including Amazon (AMZN.US), Apple (AAPL.US), Meta (META.US), and Microsoft (MSFT.US). Additionally, there will be a series of key indicators reflecting economic conditions throughout the week, ranging from U.S. Gross Domestic Product (GDP) to non-farm employment data. In other words, if there are five days that could determine the direction for the second half of this year, it would be this week.

U.S.-EU agreement triggers "trade tsunami"! OEC predicts: Global exports to the U.S. may plummet by 46%. Following the new trade agreement between the U.S. and the European Union, global exports to the U.S. are expected to be halved. U.S. President Donald Trump announced on Sunday that a 15% tariff will be imposed on most European goods exported to the U.S., including automobiles. According to the tariff simulator from the Online Economic Complexity Observatory (OEC), it is predicted that by 2027, global exports to the U.S. will decline by more than 46% compared to the average of the past three years, a reduction of $2.68 trillion. Meanwhile, U.S. exports to the world are expected to increase by 12% compared to the average of the past three years, an increase of $1.59 trillion. This prediction is based on an extended gravity model designed to forecast how the trade agreement between the U.S. and the EU will reshape trade patterns Meme Stock Frenzy Returns: Retail Investors Bet Against Institutions, Beware of the Intertwining of Bubbles and Rate Cut Expectations. The return of the meme stock frenzy last week has put professional investors in a dilemma: should they ride the wave of retail trading enthusiasm or view it as a warning signal that the market bubble is about to correct? Stocks caught in the speculative frenzy this week, such as Opendoor Technologies Inc. and Kohl's, have given back some gains mid-week, but most remain at several-month highs. The S&P 500 Index and Nasdaq 100 Index have performed even better, having strongly rebounded and reached historical highs since the sell-off triggered by the Trump administration's tariff announcement in early April. Various signs indicate that investors are gradually abandoning caution and betting on further stock market gains. Data from the Financial Industry Regulatory Authority shows that margin debt for investors borrowing funds to purchase stocks on the New York Stock Exchange has surpassed the peak during the tech bubble, reaching an all-time high.

Morgan Stanley: The Federal Reserve's Decision to Maintain Interest Rates is a Foregone Conclusion, Governors Waller and Bowman May Vote for Rate Cuts. At the conclusion of this week's FOMC meeting, Morgan Stanley expects the committee to keep the federal funds rate target range unchanged at 4.25-4.5%. Since no new dot plot will be released, the focus will shift to the post-meeting statement and the number of dovish dissenting votes. Morgan Stanley believes Waller will vote in favor of a rate cut (i.e., cast a dovish dissenting vote). The title of Waller's recent speech was "Reasons to Cut Rates Now." Although he stated in subsequent interviews that he may not necessarily vote against it, he emphasized the value of dissent and mentioned his experience voting against on the balance sheet issue earlier this year. Federal Reserve Governor Bowman is likely to cast a dovish dissenting vote, but it's hard to say (close to 50-50). She cast a hawkish dissenting vote last September but was very dovish in her speech in June this year.

Goldman Sachs: If China and the U.S. Reach a Trade Agreement, Chinese Stocks Could Rise by 11%. Goldman Sachs has raised its target for Chinese stocks, citing improving prospects for a trade agreement between China and the U.S., which would eliminate a key uncertainty in the market. Goldman Sachs has raised the 12-month target for the MSCI China Index from 85 points to 90 points, indicating an 11% upside compared to last Friday's closing price. Goldman Sachs strategists, including Kinger Lau, stated in a report released on Monday that, referencing the trading patterns of other countries that have reached trade agreements with the U.S. in recent months, "a potential China-U.S. trade agreement could become a market catalyst that clears obstacles for the Chinese stock market." The strategists also pointed out other positive factors, including a strengthening renminbi exchange rate, reduced regulatory risks for private enterprises, and improved market liquidity conditions.

Individual Stock News

$16.5 Billion! Musk Confirms Tesla (TSLA.US) Has Reached a Major Chip Deal with Samsung (SSNLF.US). Tesla CEO Musk confirmed last Sunday that the electric vehicle manufacturer has signed a semiconductor supply agreement worth $16.5 billion with Samsung Electronics (SSNLF.US), and this was confirmed in regulatory documents released earlier by the South Korean tech giant, which identified Tesla as an unnamed party Retail price disputes continue, Heineken (HEINY.US) Q2 beer sales unexpectedly decline. Heineken's beer sales have decreased due to disputes among retailers across Europe affecting sales performance and limiting the company's ability to capitalize on opportunities presented by the summer heat. The Dutch brewer reported a 0.4% decline in sales for the second quarter, which fell short of analysts' expectations. The main reason was a disagreement with purchasing groups in Western Europe over price negotiations, which lasted longer than the company anticipated and remained unresolved by the second quarter. Heineken stated on Monday that extended negotiations in France, the Netherlands, and Spain hindered sales efforts. The company maintains its full-year performance guidance, expecting an operating profit growth of 4% to 8% for the year.

$250 billion annual deal! U.S. LNG producers' stock prices soar collectively. On Monday, pre-market trading saw a collective surge in the stock prices of U.S. liquefied natural gas (LNG) developers. This followed the EU's commitment to spend $750 billion over the next three years to purchase U.S. liquefied natural gas as part of a comprehensive trade agreement. Data showed that Venture Global (VG.US) stock rose over 5%, while Expand Energy (EXE.US) and EQT Energy (EQT.US) increased by about 1%. Analysts stated that this agreement injects strong growth momentum into U.S. LNG exporters expanding capacity to meet clean energy demands. According to the framework trade agreement announced last Sunday, the EU committed to purchasing $250 billion worth of liquefied natural gas annually from the U.S. to reduce dependence on Russian gas.

Citigroup (C.US) launches high-end credit card to compete with American Express and JP Morgan. Citigroup has launched its new high-end credit card—Strata Elite—entering the credit card market for high-net-worth clients dominated by American Express (AXP.US) and JP Morgan (JPM.US). The annual fee for this credit card is $595, primarily targeting individuals who are enthusiastic about travel and dining and have higher spending amounts. Citigroup stated that if cardholders fully utilize the card's benefits, they could accumulate nearly $1,500 in rewards annually. Customers can earn the highest point rewards when booking hotels, car rentals, and experiences through Citigroup's travel website, as well as dining during popular weekend periods. The card includes travel benefits related to American Airlines (AAL.US), offers four annual lounge access passes, and allows the conversion of Citigroup "ThankYou Points" into American Airlines miles.

Important economic data and event forecasts

Beijing time 22:30: U.S. Dallas Federal Reserve Manufacturing Activity Index for July.

Earnings forecasts

Pre-market on Tuesday: Philips (PHG.US), AstraZeneca (AZN.US), Nomura (NMR.US), Barclays (BCS.US), Merck (MRK.US), UnitedHealth (UNH.US), Boeing (BA.US), Royal Caribbean Cruises (RCL.US), United Parcel Service (UPS.US), PayPal (PYPL.US)