U.S. Stock Outlook | Futures for the three major indices rise together, Trump swings the "tariff big stick" towards furniture, heavy trucks, and pharmaceuticals, PCE data arrives tonight

1. As of September 26 (Friday) before the US stock market opens, the three major US stock index futures are all up. As of the time of writing, Dow futures are up 0.22%, S&P 500 index futures are up 0.15%, and Nasdaq futures are up 0.09%.

1. As of the time of writing, the German DAX index is up 0.67%, the UK FTSE 100 index is up 0.53%, the French CAC40 index is up 0.74%, and the Euro Stoxx 50 index is up 0.72%.

1. As of the time of writing, WTI crude oil is down 0.15%, priced at $64.88 per barrel. Brent crude oil is down 0.14%, priced at $69.66 per barrel.

Market News

Tonight, the Fed's favorite inflation indicator - PCE data is coming. Following recent data showing the economy's resilience in the face of tariffs, the key PCE inflation report to be released at 8:30 PM Beijing time on Friday has become particularly important. Although the market generally expects this inflation indicator favored by the Fed will not show a very concerning rise, investors want to know if there are any hidden details. Analysts predict that this report will show the year-on-year price increase for August measured by Personal Consumption Expenditures (PCE) will be 2.7%, up from 2.6% in July, with a month-on-month increase of 0.3%, up from 0.2% last month; the core PCE, excluding the volatile food and energy sectors, is expected to have risen 2.9% over the past year, the same as July, with a slight decrease in the month-on-month rate from 0.3% last month to 0.2%.

Up to 100%! Trump's "tariff stick" swings towards furniture, heavy trucks, and pharmaceuticals. US President Donald Trump announced on Thursday that starting October 1, the US will impose high tariffs on a variety of imported products. Specifically, a 50% tariff will be imposed on cabinets, bathroom vanities, and related products, a 30% tariff on imported furniture; a 25% tariff on imported heavy trucks; and a 100% tariff on patented and branded pharmaceuticals. Trump wrote in a Truth Social post on Thursday evening: "Starting October 1, 2025, we will impose a 50% tariff on all cabinets, bathroom vanities, and related products. Additionally, we will impose a 30% tariff on upholstered furniture." The various tariffs implemented by Trump have significantly raised furniture prices over the past year. Data from the US Bureau of Labor Statistics shows that furniture prices rose 4.7% compared to August 2024 last month Milan calls for rapid and significant interest rate cuts! JP Morgan pours cold water: the argument lacks persuasiveness and is unlikely to gain internal support from the Federal Reserve. Federal Reserve's new governor Milan stated on Monday that the current interest rate level is too high and called for significant and rapid rate cuts in the coming months to avoid unnecessary layoffs in the labor market. This is the first time Milan has publicly spoken about policy stance since joining the Federal Reserve Board. Milan pointed out that the neutral interest rate is significantly declining. This rate may have been systematically overestimated in the past, while recent changes in tariffs, immigration restrictions, and domestic tax policies have further depressed the neutral rate. Therefore, to avoid harming the economy, interest rates need to be significantly lowered. In his speech at the New York Economic Club, he stated: "In short, monetary policy has deeply entered a restrictive range. Maintaining short-term interest rates about two percentage points above the neutral level may lead to unnecessary layoffs and higher unemployment rates."

Liquidity alarm sounded! U.S. banking system reserves have plummeted for seven consecutive weeks, falling below $3 trillion. Due to liquidity continuously draining from the financial system, reserves in the U.S. banking system have significantly declined for the seventh consecutive week, falling below $3 trillion. Bank reserves are a key factor concerning the Federal Reserve's decision to continue reducing its balance sheet. According to data released by the Federal Reserve on Thursday, as of the week ending September 24, bank reserves decreased by approximately $21 billion to $2.9997 trillion. This is the lowest level since the week of January 1. This decline coincides with the U.S. Treasury increasing bond issuance to rebuild cash balances after raising the debt ceiling in July. This has drained liquidity from other liabilities on the Federal Reserve's balance sheet, such as the overnight reverse repurchase agreement (RRP) and bank reserves. However, as the so-called RRP approaches exhaustion, the reserves that commercial banks hold at the Federal Reserve have been declining.

Beware of "volatile October" in U.S. stocks! Goldman Sachs warns: history shows it is more turbulent than other months. The market is closely watching the Federal Reserve's upcoming interest rate adjustments, while an important earnings season is also approaching, and the threat of a government shutdown in the U.S. is becoming increasingly severe. In this context, U.S. stocks will face another risk factor. According to Goldman Sachs' derivatives team, the historical price volatility of the S&P 500 index in October is about 20% higher than in other months. The Goldman Sachs team prefers to buy short-term options on trading days with catalysts while avoiding purchasing volatility contracts during non-event periods to take advantage of the turbulence in this earnings season. The Goldman Sachs derivatives team stated that since 1928, the historical price volatility of the S&P 500 index in October has been about 20% higher than in other months. In recent decades, this figure has been even higher, as the fourth quarter typically sees a large number of favorable corporate announcements.

Individual Stock News

Consumer demand remains stable, Costco (COST.US) Q4 performance exceeds expectations. Costco's fourth fiscal quarter earnings exceeded expectations, indicating that consumers prioritize purchasing necessities and seek discounted products, with consumer spending remaining healthy. Data shows that Costco's total revenue for the fourth fiscal quarter ending in August was $86.156 billion, a year-on-year increase of 8%, better than market expectations; net profit was $2.610 billion, compared to $2.354 billion in the same period last year; diluted earnings per share were $5.87, exceeding market expectations, compared to $5.29 in the same period last year Costco's Q4 membership fee revenue was $1.724 billion, compared to $1.512 billion in the same period last year.

Intel (INTC.US) becomes a new darling of the market! Investors rush to buy call options betting on continued gains. Investors are heavily betting on Intel, believing that as the chip manufacturer seeks further collaboration following a series of investments from the U.S. government, Nvidia (NVDA.US), and other companies, the stock's sustained weeks of gains will continue. Since September 17, Intel's stock price has risen a cumulative 37% to $33.99. Data shows that the implied volatility of Intel's three-month options surged this week to its highest level since the U.S. stock sell-off triggered by tariffs in early April this year, but investors are not seeking to hedge against downside risks; instead, they are buying call options that can profit from further increases. Meanwhile, the premium of Intel's call options relative to put options jumped this week to its highest level since 2013. A large volume of trading is concentrated in short-term contracts, with options expiring on Friday accounting for more than one-third of the total.

The proposed valuation for TikTok's U.S. business is only $14 billion, with Oracle (ORCL.US), Silver Lake, and MGX potentially holding 45% and gaining board seats. U.S. President Trump has approved a proposal allowing TikTok to continue operating in the U.S., with Vice President Pence stating that this deal will value TikTok's U.S. business at approximately $14 billion. According to the proposal, TikTok's U.S. business will be controlled by a U.S. investment group, with Oracle serving as TikTok's security service provider. The specific members of the investment group have not yet been finalized. Trump's executive order stipulates that the deal must be completed within 120 days, and it remains unclear whether the Chinese side will approve the plan. According to informed sources, Oracle, Silver Lake, and UAE's MGX are negotiating to invest in TikTok's U.S. business and secure board seats. One source indicated that the Trump administration has recently encouraged MGX to join a non-Chinese controlled alliance. ByteDance's stake in TikTok U.S. will be less than 20%.

Following a $3.45 billion fine, Google (GOOGL.US) may face further heavy fines from the EU due to its search business. Google may face a second fine from the EU in the coming months for violating the EU's landmark tech regulations, as the European Commission is drafting a related ruling. Earlier this month, the European Commission imposed a $3.45 billion (approximately €2.95 billion) fine on the tech giant in a case related to online advertising technology. This new fine is related to allegations made in March this year, which claimed that Google favored its own vertical search engines (such as Google Shopping, Google Flights, Google Hotels) over competing products. These cases against Google are all brought under the EU's Digital Markets Act. Sources revealed to the media that if Google can propose an improved solution, it may avoid this fine.

Important Economic Data and Event Forecast

Beijing time 20:30: U.S. August personal spending month-on-month (%), U.S. August PCE price index year-on-year (%) Beijing time 22:00: Final value of the University of Michigan Consumer Confidence Index for September in the United States.

Next day Beijing time 01:00: Total number of active drilling rigs in the United States for the week ending September 26.

Beijing time 21:00: Speech by 2027 FOMC voting member and Richmond Fed President Barkin.

Beijing time 22:00: Speech by Federal Reserve Governor Bowman.

Next day Beijing time 01:00: Federal Reserve Governor Bowman participates in a dialogue on monetary policy decision-making methods.

Next day Beijing time 03:30: CFTC releases the weekly positions report