U.S. Stock Outlook | Three Major Index Futures Rise, Super Micro Computer (SMCI.US) Plummets After Earnings, Trump Issues Statement After Hours

Pre-Market Market Trends

1. As of August 6th (Wednesday), U.S. stock index futures are all up before the market opens. As of the time of writing, Dow futures are up 0.35%, S&P 500 futures are up 0.24%, and Nasdaq futures are up 0.23%.

1. As of the time of writing, the German DAX index is up 0.02%, the UK FTSE 100 index is up 0.20%, the French CAC40 index is up 0.28%, and the Euro Stoxx 50 index is up 0.22%.

1. As of the time of writing, WTI crude oil is up 1.63%, priced at $66.22 per barrel. Brent crude oil is up 1.52%, priced at $68.67 per barrel.

Market News

Interest rate cut expectations are chaotic, Wall Street investment banks are "arguing." The U.S. "non-farm" data shock has caused expectations for a Federal Reserve rate cut to soar, but this week, well-known Wall Street investment banks have increased their disagreements on rate cuts. Goldman Sachs and Citigroup both believe that aggressive rate cuts may occur in September, while JP Morgan even thinks a 125 basis point cut may happen this year. However, Bank of America believes the Federal Reserve may remain on hold this year, and Barclays and HSBC share a similarly cautious attitude. The next few months will be a critical period for determining whether the Federal Reserve will cut rates. Many institutions believe that if upcoming employment and inflation data continue to be weak, especially if the unemployment rate rises to 4.4%, the likelihood of a rate cut in September will significantly increase. However, considering political interference and the independence of the Federal Reserve, the future path of monetary policy remains full of uncertainty.

Wall Street's oracle: A collapse in employment data will force a shift in Federal Reserve policy, potentially supporting higher stock market valuations. Tom Lee, co-founder and research head of financial market research firm Fundstrat, stated: "The Federal Reserve has a dual mandate: employment and inflation. Goldman Sachs pointed out that the magnitude of these employment data revisions is unprecedented in 57 years. This reinforces the extent to which the labor market is deviating from the Federal Reserve's mandate, and it is more severe than the Federal Reserve realizes." He added: "For me, a shift in Federal Reserve policy is imminent, which will support higher price-to-earnings ratios." His remarks suggest that as lower interest rates reduce discount rates and increase investor interest in risk assets, stock valuations may rise.

Trump's attack on employment data "fraud" ignites a crisis of trust, is the $2 trillion TIPS market hanging by a thread? Last Friday, after the weak employment report was released, Trump fired BLS director Erica McTavish and accused the data of being "fraudulent," raising deep concerns in the market about the credibility of government data—these data have a significant impact on asset pricing This correlation is particularly evident in the TIPS market. The principal value of this bond type is directly linked to the Consumer Price Index (CPI) compiled by the Bureau of Labor Statistics (BLS), and interest payments are based on the floating principal. Amar Reganti, fixed income strategist at Hartford Funds, stated: "If the BLS becomes politicized and the credibility of the data is compromised, it will pose a significant risk to the TIPS market in the long run."

Traders frantically hedge against a "Federal Reserve pivot," with a possibility of a 50 basis point aggressive easing in September. Signs of weakness in the U.S. economy provide a basis for the Federal Reserve to respond to Trump's calls for rate cuts, and the bond market is increasing bets on rate cuts this year. SOFR options tracking monetary policy indicate that investors are positioning for the possibility of rate cuts in all three remaining meetings, expecting a cumulative reduction of 75 basis points by 2025, with some funds even betting on a direct 50 basis point cut in the September meeting. Additionally, the yield on the 10-year U.S. Treasury bond has fallen from last month's high of 4.49% to 4.20%. The skew of U.S. Treasury options has shifted entirely to bullish, paying a premium for upside protection, with the expansion of long-term bullish skew reaching its largest since April.

Is the U.S. Treasury market in crisis? Two former Treasury Secretaries warn: deficits and tariffs are eroding the market's foundation. Henry Paulson, Treasury Secretary during the George W. Bush administration, stated: "In terms of deficit spending, our current trajectory is unsustainable, although it is impossible to predict whether the crisis will erupt in six months, six years, or longer." Timothy Geithner, who succeeded as Treasury Secretary during the Obama administration, pointed out that the yield on the 10-year U.S. Treasury bond is currently at a "fairly moderate level," indicating that the market still believes the U.S. will eventually return to a more reasonable policy path. "Ultimately, it depends on whether the U.S. can balance its fiscal accounts, moderately reduce the deficit, and maintain the rule of law and the independence of the Federal Reserve, which are the cornerstones of public confidence. However, compared to the past, these cornerstones are now shrouded in more shadows."

Individual Stock News

The first domino to burst the AI valuation bubble? AI computing leader Super Micro Computer (SMCI.US) drastically cuts earnings outlook. The financial report shows that Super Micro Computer's sales in the fourth fiscal quarter increased by 7.5% year-on-year to $5.76 billion, falling short of the market expectation of $6.01 billion; adjusted earnings per share were $0.41, below the market expectation of $0.44. The company expects total sales for the fiscal year ending June 2026 to reach at least $33 billion. In comparison, in February of this year, the company's management provided a very optimistic long-term outlook due to strong demand for AI server product lines, stating that fiscal year sales would reach $40 billion. Furthermore, the company's management predicts an operating profit margin of only 5% for the quarter ending in September, below the market expectation of 10%, highlighting the intense competition in the AI server sector that continues to erode margins. As of the time of publication, Super Micro Computer's stock fell nearly 17% in pre-market trading on Wednesday.

AMD (AMD.US) Q2 earnings report cools: Data center growth lags behind NVIDIA, uncertainties in the Chinese market drag down performance. The financial report shows that AMD's revenue in the second quarter increased by 32% year-on-year to $7.7 billion, exceeding analyst expectations of $7.43 billion, but adjusted earnings per share were $0.48, below Wall Street's expectation of $0.49 Among them, revenue from the data center business grew 14% to $3.2 billion, slightly below the market expectation of $3.25 billion. In contrast, competitor NVIDIA's Q1 financial report showed its data center business revenue surged 73% to $39.11 billion. The company also warned that its process of returning to the key Chinese market remains full of uncertainties, casting a shadow over the originally optimistic AI business outlook. As of the time of writing, AMD's stock fell nearly 6% in pre-market trading on Wednesday.

Novo Nordisk (NVO.US) Q2 net profit increased by 32% year-on-year, with semaglutide securing the throne of the drug king. The financial report shows that the company's Q2 sales were 76.857 billion Danish kroner, a year-on-year increase of 13%, and an 18% increase year-on-year at constant exchange rates (CER); operating profit was 33.449 billion Danish kroner, a year-on-year increase of 29%, with a 40% increase at CER; net profit was 26.503 billion Danish kroner, a year-on-year increase of 32%. Novo Nordisk stated that the global sales growth in Q2 was due to the improvement in the sales of its product portfolio. The total revenue from its three semaglutide products in the first half of the year was 112.756 billion Danish kroner ($16.683 billion), surpassing K drug sales ($15.161 billion) to become the new drug king.

The US-Japan trade agreement "saves the day"! Honda (HMC.US) Q1 performance is bleak but raises full-year guidance, estimating tariff losses to decrease by 200 billion yen. The financial report shows that Honda's Q1 revenue was 5.34 trillion yen, a year-on-year decrease of 1.2%, falling short of the market expectation of 5.40 trillion yen. Operating profit was 244.17 billion yen, a year-on-year decrease of 49.6%, also below the market expectation of 309.65 billion yen. Honda expects revenue for the fiscal year 2025 to be 21.1 trillion yen, higher than the previous expectation of 20.3 trillion yen; it expects full-year operating profit to be 700 billion yen, up from the previous expectation of 500 billion yen. Honda stated that it raised its forecast after analyzing the impact of tariffs and reassessing its foreign exchange assumptions based on the latest situation. The company expects the operating profit loss due to tariffs for the fiscal year 2025 to be 450 billion yen, down from the previous expectation of 650 billion yen. As of the time of writing, Honda's stock rose over 3% in pre-market trading on Wednesday.

McDonald's (MCD.US) Q2 revenue grew 5.4% year-on-year, exceeding expectations, with operating profit increasing by 11% year-on-year. The financial report shows that McDonald's Q2 revenue increased by 5.4% year-on-year to $6.84 billion, better than the market expectation of $6.7 billion; same-store sales grew by 3.8%, exceeding the market expectation of 2.5%; operating profit was $3.23 billion, a year-on-year increase of 11%; adjusted earnings per share were $3.19, better than the market expectation of $3.14. Same-store sales in the US grew by 2.5%—the growth was mainly driven by an increase in average transaction value, while the situation regarding customer traffic growth remains unclear and warrants caution. The international direct market (growth of 4.0%) and the international franchising market (growth of 5.6%, led by the Japanese market) performed strongly, becoming the main engines of the company's growth. As of the time of writing, McDonald's stock rose over 3% in pre-market trading on Wednesday Uber (UBER.US) Q2 revenue and Q3 performance guidance exceed expectations. The financial report shows that Uber's Q2 revenue was $12.65 billion, better than the market expectation of $12.47 billion; earnings per share were $0.63, in line with market expectations. Order volume increased by 18% to 3.3 billion, and monthly active platform consumers rose by 15%. Total bookings increased by 17% to $46.8 billion. The company expects total bookings for the third quarter to reach between $48.25 billion and $49.75 billion, higher than the market expectation of $47.5 billion.

Disney (DIS.US) Q3 performance exceeds expectations, decline in paid TV business overshadows strong performance in theme parks and streaming. The financial report shows that Disney's Q3 revenue was $23.65 billion, a year-on-year increase of 2%, in line with market expectations; adjusted earnings per share were $1.61, a year-on-year increase of 16%, better than the market expectation of $1.46. However, revenue from traditional television networks and sports programming fell short of market expectations, overshadowing the strong performance of the company's theme parks and streaming business. The theme park division's profit grew by 13% in the quarter, while the streaming business generated a profit of $346 million, and traditional entertainment television's profit declined by 28%, with Disney Studios reporting a loss. Disney currently forecasts full-year earnings per share of $5.85, higher than the previous expectation of $5.75. As of the time of writing, Disney's stock fell nearly 2% in pre-market trading on Wednesday.

Lucid (LCID.US) Q2 financial report falls short of expectations, lowers full-year production guidance to 18,000-20,000 vehicles. The financial report shows that Lucid's adjusted loss per share in the second quarter was $0.24, worse than analysts' expectations of $0.21; revenue was $259 million, also below the market forecast of $280 million. Notably, Lucid simultaneously adjusted its full-year production target, revising it from the original 20,000 vehicles to a range of 18,000 to 20,000 vehicles. According to July data, Lucid's deliveries in the second quarter increased by 38.2% year-on-year to 3,309 vehicles, but still fell short of analysts' expectations. As of the time of writing, Lucid's stock fell over 7% in pre-market trading on Wednesday.

Q2 advertising growth plummets to 4%! Snap (SNAP.US) system glitch depresses prices. The financial report shows that the company's Q2 sales were $1.345 billion, slightly below analysts' expectations of $1.35 billion. The company stated that advertising revenue, which grew by 9% in the first quarter, is now growing at a rate of 3% to 4%. The company indicated that Q2 revenue was squeezed when it updated its advertising auction, inadvertently allowing marketers to purchase ads at "significantly reduced prices." As of the time of writing, Snap's stock fell nearly 18% in pre-market trading on Wednesday.

Important economic data and event forecasts

At 02:00 Beijing time the next day, 2025 FOMC voting member and Boston Federal Reserve President Collins will speak on the U.S. and global economy.

At 02:00 Beijing time the next day, Federal Reserve Governor Lisa Cook will speak on the U.S. and global economy At 04:10 Beijing time the next day, 2027 FOMC voting member and San Francisco Federal Reserve President Mary Daly delivered a speech.

At 04:30 Beijing time the next day, U.S. President Donald Trump made a "statement" in the Oval Office.

Earnings Forecast

Thursday morning: Occidental Petroleum (OXY.US), Applovin (APP.US), DoorDash (DASH.US), Airbnb (ABNB.US), Fortinet (FTNT.US)

Thursday pre-market: Toyota (TM.US), Sony (SONY.US), Eli Lilly (LLY.US), Hutchison China MediTech (HCM.US), Lexin (LX.US)