US stock outlook | The three major stock index futures rose sharply, and the market ushered in a big week

Pre-market market trends

1. On July 22 (Monday), the futures of the three major US stock indexes rose sharply before the US stock market. As of press release, Dow futures were up 0.14%, S&P 500 futures were up 0.62%, and NASDAQ futures were up 1.00%.

2. As of press release, the German DAX index rose 1.40%, the UK FTSE 100 index rose 0.86%, the French CAC40 index rose 1.32%, and the European Stoxx 50 index rose 1.45%.

3. As of press release, WTI crude oil fell 0.57% to $78.19 per barrel. Brent crude oil fell 0.52% to $82.20 per barrel.

Market news

US GDP, PCE data, and Google and Tesla earnings reports hit the ball! Expectations of interest rate cuts and “AI beliefs” are being tested. This week, heavy data on economic growth and inflation, as well as financial reports from big tech giants, will determine whether US stocks can launch a counterattack. In terms of economic data, preliminary US GDP data for the second quarter will be released on Thursday evening Beijing time, and the Federal Reserve's favorite inflation indicator — the June PCE price index data — will be released on Friday evening Beijing time. Furthermore, as the epic investment heatwave surrounding artificial intelligence continues to dominate Wall Street and global stock markets, investors will pay close attention to the Google (GOOGL.US) and Tesla (TSLA.US) earnings conference call scheduled to be announced after the US stock market on July 23, EST.

Biden announced his withdrawal from the election! The global market is in deep contemplation: is the “Trump deal” still worth betting on? On July 21, local time, US President Joe Biden announced his withdrawal from the 2024 presidential election. Investors are beginning to pay attention to whether Biden's decision to end his re-election campaign and support Vice President Harris will increase or decrease Trump's chances of returning to power. Trump's previous performance in the US presidential election debate and his subsequent assassination attempt boosted his prospects of winning the election. As a result, the market favors deals that are thought to benefit from more relaxed fiscal policies, higher trade tariffs, and weaker regulations advocated by Trump. Zachary Griffiths, head of US investment grade and macro strategy at CreditSights, said: “The primary impact of this statement should be more uncertainty. This usually causes the market to enter a safe-haven mode — the stock market sells off, and investors are buying high-quality stocks.” Some analysts suggest that the market may fluctuate as traders wait and see if Harris can be nominated by the party and weigh whether she can gather enough momentum to challenge Trump's leading position in the polls.

Will US stocks face a bleak fall? Analyst: The rise is close to the upper limit, and there may be a 12% pullback before October. The intense rise in US stocks may come to an abrupt end in the fall of this year. Bill Blain, founder of Wind Shift Capital and senior strategist, predicts that US stocks will fall 7%-12% by October. This pullback could be triggered by a variety of factors: escalating geopolitical tension, rising inflation, and the unpredictable Black Swan incident. Bill Blain predicts that all kinds of risks are spreading, and there may be a pullback in October this year. He said, “All of these factors may cause a pullback. Signs of this can already be felt in surrounding markets, because currently people are not rolling off a cliff, but rolling down a slope.” He's shying away from big tech stocks and is currently only optimistic about “boring, boring, and predictable” stocks.

Tech giants fall and small-cap stocks are fed up! When will the big rotation of US stocks stop? Goldman Sachs: This metric is key. Goldman Sachs said that until large companies raise their revenue guidelines, the trend of rotating from large US technology stocks to small-cap stocks will continue. Goldman Sachs stock strategist David Kostin said that the Russell 2000 index recorded its strongest five-day performance in at least 40 years compared to the S&P 500 index. Kostin believes that there are four reasons for the rotation: (1) as the Federal Reserve is about to cut interest rates and US inflation data slows, this means that interest expenses on small-cap stocks will fall; (2) economic growth data is stable; (3) the market expects Trump to win the US election, and during Trump's presidency, small-cap stocks performed better than other companies and are less susceptible to tariffs; (4) the growth premium for large-cap stocks closes.

Don't be afraid of pullbacks! The latest MLIV survey: corporate earnings reports will become a “lifesaver” for US stocks. Although the recent sharp decline in the US stock market has prepared some Wall Street professionals for a summer correction, the latest Markets Live Pulse (MLIV Pulse) survey shows that respondents expect the latest round of corporate earnings to revive the S&P 500 index. Of the 463 respondents, nearly two-thirds expected earnings reports to boost the US stock market benchmark index. About half of the respondents predicted that the performance of US companies in the next few months will be better than in the first half of the year. Andrew Tyler, head of US market intelligence at J.P. Morgan Chase, said in the report that he expects a positive profit catalyst to pull the S&P 500 index out of its trough. In particular, analysts' predictions for the so-called “Big Seven” indicate “another strong quarter,” and the second-quarter earnings of these companies are expected to increase by about 30% year on year.

Individual stock news

Verizon (VZ.US) Q2 revenue fell short of expectations, reaffirming wireless service revenue and profit guidelines for the full year. Verizon's Q2 revenue was $32.8 billion, up 0.6% year over year, below analysts' average forecast of $33.1 billion; adjusted earnings per share were $1.15, in line with analysts' average expectations. Q2 wireless service revenue increased 3.5% year over year to US$19.8 billion, in line with expectations. The company reiterated its expectation that wireless service revenue will increase by 2% to 3.5% this year, and expects full-year adjusted earnings per share of $4.50 to $4.70. As of press release, Verizon's US stocks fell nearly 3% before the market on Monday.

Ryanair (RYAAY.US) Q1 profit hit hard! The air ticket price war may intensify in the summer. Irish low-cost airline Ryanair announced financial results for the first quarter, showing that pre-tax profit fell sharply by 46% year over year, to only 360 million euros. This decline exceeded analysts' and investors' expectations. Ryanair's average Q1 fare fell 15% to €49 per passenger; while revenue fell slightly by 1% to €3.63 billion. Ryanair said that due to an unexpected sharp drop in quarterly profits, ticket prices for the key summer travel season are expected to be significantly lower than the same period last year. Company CEO Michael O'Leary pointed out that the trend of falling spring ticket prices is expected to continue, which may signal the end of the aviation industry's post-pandemic boom period. As of press release, Ryanair's US stocks plummeted by more than 14% before the market on Monday.

Nvidia (NVDA.US) is rumored to be developing a new generation of flagship AI chips in China. According to sources, Nvidia is developing a new flagship artificial intelligence (AI) chip for the Chinese market that complies with current US export controls. Sources said that Nvidia will cooperate with Wave, one of its main distributors in China, to distribute the chip, tentatively named “B20.”

Woodside is betting on rising gas demand! Tellurian (TELL.US) was swallowed at a premium of 900 million dollars. Australian oil and gas giant Woodside has agreed to buy the struggling US LNG export project developer Tellurian for about 900 million US dollars, betting on the rapid growth in global demand for natural gas as a clean fuel. Woodside will pay approximately $1 in cash per share — significantly higher than the latest US stock closing price of $0.57 to fully control Tellurian, including the proposed US Gulf Coast Driftwood LNG project. Boosted by this news, as of press release, Tellurian's pre-market share surged more than 65% on Monday.

Musk: Tesla (TSLA.US) will produce humanoid robots on a small scale next year for internal use. Tesla CEO Musk said on Monday that the company will produce humanoid robots on a small scale next year for use within the company. Musk also said that the company will mass-produce humanoid robots in 2026 and “hopes” they can be used by other companies. In April of this year, Musk said that this humanoid robot called Optimus will be able to perform tasks at Tesla's factory before the end of this year, and may be sold as early as the end of 2025. Earlier this month, Musk said that the design of the company's second-generation humanoid robot Optimus will be completed in late 2024. Musk said the new design was “special,” but did not reveal any other details.

Stock god Buffett reduced his Bank of America (BAC.US) stock holdings by 34 million shares and cashed out US$1.48 billion. After Bank of America released Q2 results that exceeded expectations, Buffett took steps to reduce his holdings of his favorite bank stock after a lapse of four years. According to the latest public documents, Buffett-led Berkshire Hathaway sold about 34 million shares of Bank of America for $1.48 billion in a recent transaction. Despite this reduction in holdings, Berkshire Hathaway still holds more than 998 million Bank of America shares, with a market capitalization of more than 42 billion US dollars, making it one of the bank's largest shareholders. There are various speculations in the market about Buffett's current reduction in Bank of America holdings. Looking at the macro environment, the world is currently facing multiple challenges of high inflation, rising interest rates, and slowing economic growth. And the Federal Reserve keeps interest rates high in order to curb inflation, which has put pressure on the US banking industry, which has been dependent on the expansion of a low-interest rate environment for a long time.

Performance Forecast

Tuesday pre-market: Coca Cola (KO.US), GE Aerospace (GE.US), United Parcel (UPS.US), General Motors (GM.US)

After Tuesday: Google (GOOGL.US), Tesla (TSLA.US), Visa (V.US), Texas Instruments (TXN.US)