US stock outlook | Futures on the three major stock indexes rose sharply, and Asmack continued to fall by more than 3% before the market

1. On October 16 (Wednesday), the futures of the three major US stock indexes rose sharply before the US stock market. As of press release, Dow futures were up 0.04%, S&P 500 futures were up 0.13%, and NASDAQ futures were up 0.20%.

2. As of press release, the German DAX index fell 0.41%, the UK FTSE 100 index rose 0.76%, the French CAC40 index fell 0.55%, and the European Stoxx 50 index fell 0.76%.

3. As of press release, WTI crude oil fell 0.64% to $70.13 per barrel. Brent crude fell 0.65% to $73.77 per barrel.

Market news

The epic rise in US stocks “conquered” Wall Street, and strategists called out a target of 6,100 points. As the US stock market ushered in its strongest rebound in nearly 30 years, Wall Street strategists have raised their predictions for the US stock market. Strategists at BMO Capital Markets, Goldman Sachs Group, and UBS raised their year-end targets for the S&P 500 index over the past month, and it is expected that the index will continue to rise. Since this year, the S&P 500 index has risen 22% cumulatively. These moves reflect a rise in US stocks that surpassed expectations this year, as the US economy and corporate profit performance was surprisingly strong, and investors continued to pour in technology stocks that are expected to benefit from the AI boom. Earlier this month, Goldman Sachs chief stock strategist David Kostin raised the year-end target for the S&P 500 index to 6,000 points. This is also the fourth time he has raised his forecast since the last few months of 2023. Among forecasters tracked by Bloomberg, his year-end forecast for the S&P 500 index ranked second.

Wall Street mood is high! Goldman Sachs strategists shouted: the S&P 500 index will far exceed 6,000 points by the end of the year. Goldman Sachs strategy expert Scott Rubner said on Tuesday that the stock market seems ready to rebound at the end of the year, which may push the S&P 500 index through the 6,000 mark. The day before Rubner made these remarks, the S&P 500 closed at 5859.85 points and hit the 46th closing high in 2024. Rubner said in early October that he was “tactically bearish” on the US stock market for the next three weeks, but now he believes that some unfavorable factors are fading away and the stock capital flow trading environment will show a positive trend. “The sell-off in the stock market is over, and the rebound at the end of the year is beginning to resonate, and customers are shifting from left-tail hedging to right-tail hedging,” Rubner said. “Institutional investors are now being forced to enter the market given the 'FOMU' (fear of falling seriously behind).”

Cantor Fitzgerald is optimistic about the Russell 2000 Index and predicts that Trump's victory will benefit small-cap stocks. US financial services company Cantor Fitzgerald expressed optimism about the Russell 2000 Index because it believes that Republican presidential candidate Trump is more likely than market expectations to win the November US presidential election, and Trump's return to the White House will benefit small-cap stocks. According to a poll released on Tuesday, competition between Democratic presidential candidate Harris and Trump is becoming more intense, and both candidates have 48% approval ratings among voters. And last month's poll showed that Harris was 5 percentage points ahead of Trump with an approval rating of 49% to 44%. Cantor Fitzgerald pointed out that small-cap stocks usually perform well when the general election is approaching, and as pro-Trump polls gradually heat up, the market is also beginning to look forward to it.

The “Trump Deal” is making a comeback! Demand for US dollar call options has surged. Due to speculation that Republican presidential candidate Trump will win the US presidential election next month, hedge funds are increasing their bets on rising exchange rates of the US dollar against the renminbi, the euro, and the Mexican peso. Traders said that in the foreign exchange options market of more than 300 billion US dollars, US dollar call options are becoming more and more popular, and if the exchange rate of the US dollar rises against other currencies threatened by tariff policies, the value of these options will rise. Saurabh Tandon, head of global foreign exchange options at Standard Chartered Bank, said: “When Trump's odds began to shift in his favor last week, this bet began to increase.” As the US election date of November 5 approaches, the surge in options trading echoes the actions of some of the world's largest companies to hedge against exchange rate risks. In the gaming market, Trump narrowly led Democratic presidential candidate Harris.

Damascus: The strengthening of the US dollar may threaten the rise of US stocks. Michael Wilson, chief US stock strategist at Morgan Stanley, said that a stronger dollar may be one of the few obstacles threatening the rise of US stocks. “A stronger dollar may cause the stock market rebound to slow down again,” he said. “This is probably one of the things we are focusing on right now, and it may affect the trend of US stocks reaching new highs over and over again.” US stocks have repeatedly reached new highs since this year. As investors prepare for a new earnings season, the S&P 500 index hit its 46th all-time closing high in 2024 on Monday. At the same time, however, the Bloomberg dollar index has risen about 2% since the beginning of October, as higher-than-expected inflation and non-farm payrolls data have caused investors to reduce their bets on how fast the Federal Reserve will cut interest rates in the future.

Throw India and buy China! Bank of America's latest survey: Global fund managers are scrambling to pour into the Chinese stock market. A Bank of America Securities survey shows that after China, the largest economy in Asia, introduced a stimulus plan, global fund managers increased their investment in China at the expense of India's allocation. On Saturday, China promised a sharp increase in debt to revive the economy. Meanwhile, the central bank announced the most aggressive monetary support measures since the pandemic in September. Bank of America Securities said in a Tuesday report: “Growth expectations for China have revived after the policy shift.” “(Survey) participants thought this time was different because they gave up looking for opportunities elsewhere and turned their sights on China.” The Bank of America survey shows that they are refocusing on China at the cost of reducing their allocation to the Indian stock market.

Individual stock news

The rapid performance of ASML.US (ASML.US) “shocked” global chip stocks, and the total market value evaporated by more than US$420 billion. Lithography giant Asmack issued disappointing performance guidelines, triggering a sharp decline in global chip stocks, and a total market value loss of more than 420 billion US dollars. The warning issued by Asmai threw cold water on chip stocks that have rebounded from the summer sell-off. Just earlier this week, shares of the leading chip maker hit a new high as market concerns about production issues with Nvidia (NVDA.US)'s latest artificial intelligence products eased. On Tuesday local time, Asma's earnings report, which was originally scheduled to be released on Wednesday, was unexpectedly released ahead of schedule. The company's third-quarter performance was in full swing. Sales and gross margin were in line with expectations, but orders fell short of half of market expectations, and sales targets for next year were lowered. Affected by this news, Asmack's stock price in the European stock market showed the biggest drop since 1998. As of press release, Asmack was down more than 3% in the premarket.

Morgan Stanley (MS.US)'s third-quarter results generally exceeded expectations. Morgan Stanley's net revenue for the third quarter was US$15.38 billion, with market expectations of US$14.35 billion. Net income from wealth management for the third quarter was $7.27 billion, and market expectations were $6.88 billion. Investment banking revenue was $1.46 billion, and market expectations were $1.37 billion. The fixed income, foreign exchange and commodities business (FICC) sales and transaction revenue was $2 billion, and the market forecast was $1.85 billion.

Rio Tinto (RIO.US) Q3 iron ore shipments fell slightly short of expectations, reaffirming the annual production target. Rio Tinto announced a 1% increase in third-quarter iron ore shipments on Wednesday, but it was slightly below market expectations as improvements in its Pilbara (Pilbara) business increased production. Iron ore prices remained under pressure for most of the third quarter, and the outlook for demand was bleak. In the three months ending September 30, the world's largest iron ore producer shipped 84.5 million tons of iron ore from its Pilbara (Pilbara) operations, compared to 83.9 million tons in the same period last year; in comparison, analysts' consensus estimate was 84.74 million tons. Rio Tinto reaffirmed its annual iron ore production guidelines after increasing production in the September quarter. Rio Tinto said that in the year ending December 31, the company is still expected to achieve its annual target of shipping 323 million tons to 338 million tons of iron ore from the Pilbara (Pilbara) business.

IBKR.US (IBKR.US)'s Q3 revenue increased 19% year over year, and profit fell short of expectations. After the US stock market on Tuesday, Yingtou Securities announced its third-quarter results. According to the data, the online brokerage firm's third-quarter revenue increased 19% year over year to US$1,365 million, better than market expectations of US$1,337 million; earnings per share were US$1.75, up 13% year over year, falling short of market expectations of US$1.82. Commission revenue increased 31% in the third quarter due to increased customer trading volume. Net interest income increased 8%. The number of customer accounts surged 28%. The total volume of DARTs (daily earnings transactions) surged 42%. However, general and administrative expenses jumped 67% in the third quarter. The company said, “The one-time costs associated with the merger of the European subsidiary were $12 million, and the costs relating to legal and regulatory matters increased by $9 million.” According to FactSet data, analysts expect the earnings per share of Yingtou Securities to increase by 21% for the whole year.

The cost reduction and profit increase plan was recognized by the market, and Walgreen-United Bosch (WBA.US) stock price surged nearly 16%. As American consumers continue to cut expenses under the pressure of high interest rates, Walgreen-United Bosch, one of the largest pharmacy chain operators in the US, plans to close 14% of US stores to cut costs in an effort to accelerate the improvement of the company's profit fundamentals. Stimulated by this news of cost cuts and relatively optimistic latest financial data, Walgreen-United Bosz (“Walgreens” for short) stock prices rarely soared. The US pharmacy chain operator said on Tuesday EST that it will close about 1,200 stores within the next three years, 500 of which are expected to close in 2025. By the close of the US stock market on Tuesday, the stock, which had been weak since 2022, had a rare sharp rise, eventually closing up nearly 16%.

Luxury goods leader LVMUY.US (LVMUY.US) had the worst Q3 performance in four years. At one point, the stock price plummeted by more than 10%! LVMH Moët Hennessy Louis Vuitton of the global luxury goods industry leader LVMH Moët Hennessy Louis Vuitton announced financial results for the third quarter on Tuesday, facing the worst quarterly performance since the global pandemic in Q2 2020. The Group's overall sales in Q3 fell 3%, and sales of fashion and leather goods fell for the first time since the pandemic. Organic revenue from key divisions of the Group's brands, including Louis Vuitton and Dior, fell 5% in the third quarter. Previously, analysts expected a slight increase. The group is headquartered in Paris, and its American Depositary Receipts plummeted 10% intraday after earnings reports were released, then the decline narrowed and closed down 8%. American rivals such as Ralph Lauren and Estée Lauder, Gucci's parent company Kering Group's American Depositary Receipts also fell sharply.

United Airlines (UAL.US) exceeded expectations in Q3 revenue and EPS, and launched a $1.5 billion share repurchase program. United Airlines' Q3 revenue was US$14.843 billion, up 2.5% year over year, better than analysts' general expectations of US$14.78 billion. By business, passenger revenue was US$13.561 billion, up 1.6% year on year; cargo operating revenue was US$417 million, up 25.2% year on year; other revenue was US$865 million, up 7.9% year on year. Operating profit was US$1,565 million, down 10.0% year on year; net profit was US$965 million, down 15.1% year on year; diluted earnings per share were US$2.90, compared to US$3.42 in the same period last year. Adjusted earnings per share of $3.33 were better than analysts' general expectations of $3.07 and lower than $3.65 in the same period last year. Available seat miles (ASMs) for Q3 were 81,541 million miles, up 4.1% year over year; passenger revenue per available seat mileage (PRASM) was 16.63 cents, down 2.4% year over year.

The China Cyberspace Security Association recommended that the system investigate product security risks, and Intel (INTC.US) fell more than 2% before the market. The China Cyberspace Security Association published an article “Frequent Vulnerabilities and High Failure Rates Should Systematically Investigate the Cybersecurity Risks of Intel Products”, which states that it is recommended to launch a cybersecurity review of products sold by Intel in China to effectively safeguard China's national security and the legitimate rights and interests of Chinese consumers. Intel fell 2.03% to $22.20 in the premarket. The China Cyberspace Security Association is a national, industrial, non-profit social organization voluntarily formed by domestic institutions, enterprises and individuals engaged in cyberspace security-related industries, education, scientific research, and applications. The organization has close ties to the Chinese government, and its series of allegations could trigger a security review by China's powerful cyberspace regulator, the National Internet Information Office (CAC).

Key economic data and event forecasts

20:30 Beijing time: The monthly rate of the US import price index for September (%).

The next day at 04:30 a.m. Beijing time: US API crude oil inventory changes for the week ending October 11 (10,000 barrels).

The next day at 06:00 a.m. Beijing time: An interview with US Vice President Harris on Fox News was broadcast.

Performance Forecast

Thursday Morning: Alcoa (AA.US)

Thursday pre-market: TSM.US, Nokia (NOK.US), Blackstone (BX.US)