US stock outlook | Futures on the three major stock indexes had mixed ups and downs, Moderna skyrocketed before the market, minutes of the Federal Reserve's July meeting and the 20-year US bond auction are coming tonight

Pre-market market trends

1. Before the US stock market on August 19 (Wednesday), futures for the three major US stock indexes had mixed ups and downs. As of press release, Dow futures were up 0.13%, S&P 500 futures were up 0.05%, and NASDAQ futures were down 0.21%.

2. As of press release, the German DAX index fell 0.21%, the UK FTSE 100 index fell 0.01%, the French CAC40 index rose 0.37%, and the European Stoxx 50 index rose 0.08%.

3. As of press release, WTI crude oil rose 0.71% to $84.66 per barrel. Brent crude rose 0.63% to $91.59 per barrel.

Market news

What Walsh didn't say, the minutes of tonight's Federal Reserve meeting will be added! At 2 a.m. Beijing time on Thursday, the Federal Reserve will release the minutes of the July meeting. Traders are looking forward to finding more clues from the documents to determine the central bank's true views on future interest rate paths and inflation risks. The minutes of this meeting are more important than usual because the Federal Reserve recently reduced disclosure of policy guidelines. At the July meeting, the Federal Reserve maintained the federal funds rate target range of 3.5% to 3.75% for the fifth time in a row, but 3 of the 12 voting committee members raised objections and supported interest rate hikes. Federal Reserve Chairman Walsh's statement at the press conference was brief and did not explain in detail how the committee balances inflation, economic growth, and future policy risks. This made the market more reliant on meeting minutes to try to understand policy discussions that were not disclosed in public statements. The market focuses on whether a more clear trend of interest rate hikes is being formed within the Monetary Policy Committee. If the minutes release stronger hawkish signals, US Treasury yields may rise further, and the US dollar is supported, while putting pressure on interest-sensitive stocks; if the minutes show that the Commission still has clear differences, the stock sector, which has recently been pressured by rising financing costs, may be relieved to some extent.

With the $16 billion 20-year US bond auction coming up, will the yield reach a new high? On Wednesday local time, the US Treasury will issue 20 billion US dollars of 20-year treasury bonds, of which about 16 billion US dollars will be issued as new bonds to investors. As long-term US bond yields have continued to rise recently, this auction is becoming an important window for the market to observe investors' ability to withstand US financial conditions and debt supply. As of press release, the 20-year US Treasury yield was 5.266%. The core issue that the market is concerned about is: as the US government's demand for loans continues to expand, how much interest will need to be paid in the future to continue to attract global capital to buy US Treasury bonds. Over the past week, the US Treasury bond market has sent out similar signals. The winning yield on 10-year treasury bonds issued by the US Treasury reached 4.683%, the highest level in 19 years; the yield on 30-year treasury bonds auctions reached 5.216%, the highest level in 25 years. Long-term bond yields continue to rise, indicating that investors are demanding higher returns to offset the uncertainty caused by the widening US fiscal deficit, growing debt, and the risk of future inflation.

J.P. Morgan Asset Management Warning: The risk of AI concentration spreads to the bond market, and investors need to be wary of “crowded transactions.” Gabriela Santos, a strategist at J.P. Morgan Asset Management, warned that the risk of concentration of “AI elements” has spread from the stock market to the fixed income sector. Although the “supercycle” rhetoric still holds true, the need for investors to act prudently is rising sharply. Santos said, “You can totally be optimistic about everything related to AI, but you still need to think very carefully about portfolio construction.” Santos's warning about concentration extends to bond portfolios. Santos said that the number of investment-grade bonds issued has reached a record high for the fourth month in a row, and companies including Google have even issued 100-year bonds. Furthermore, multi-asset investors are now facing the risk of AI construction expansion on both the stock and fixed income sides at the same time.

BTIG: Once the “music” stops, the US stock game will end at any time. The US stock market is undergoing an unprecedented structural split. Price increases and falls continue to diverge from the breadth of the market, and capital rotates irregularly between different factors, and once this “musical chair game” music stops, investors will face an overall high-correlation sell-off after a long absence. Market breadth is one of the core indicators for measuring the health of the market. BTIG technical strategist Jonathan Krinsky released a report on Wednesday stating that up to now, there have been 57 trading days in 2026, which is the opposite of the market breadth trend, tied with the past two years for the highest number in nearly 30 years — but currently only in mid-August, this record is bound to be further broken during the year. “We are closer to that day than many people expected”, Krinsky warned — if there are no more “chairs” left in the market at that time, investors will be forced to switch to cash, triggering a full simultaneous sell-off that hasn't occurred in ten months.

Long-term US bond yields are still high, but interest rate options have changed: interest rate cut deals have arrived. With the recent weakening of a series of US economic data, bond traders are rapidly adjusting their judgment on the Federal Reserve's policy path. Although long-term US bond yields have remained high for many years, capital flows in the interest rate options market have begun to shift to betting that the Federal Reserve will cut interest rates in 2027 to hedge against the risk of economic slowdown. The change began with a series of economic data released last week. The data showed that both US inflation and consumer demand slowed in July. The non-farm payrolls report released later showed that the US economy unexpectedly lost 23,000 jobs in July; retail sales recorded the biggest decline in more than a year, and consumer confidence weakened at the same time. Affected by this, the market's expectations for a rate hike at the Federal Reserve interest rate meeting on September 16 declined markedly. Options traders have begun to establish new positions, betting that the interest rate hikes reflected in the swap market will be revised again in the next few months, and some investors have even begun to hedge against interest rate cuts before mid-2027.

Legendary investors are betting on America's recession next year: rising inflation may blow up the valuation of US stocks. Billionaire investor, Omega Advisors CEO and former Goldman Sachs CEO Leon Cooperman once again warned the US economy and stock market this week. He anticipates that the US economy may fall into recession within the next year and may drag down the stock market. Cooperman said that the current market is similar to the historical boom-recession cycle, including the collapse of “Pretty 50” stocks in the early 70s of the last century. He believes that market optimism about AI investment may also begin to cool down. “I think we will experience a recession sometime next year, which may cause the market to fall.” Cooperman also believes that investors are ignoring the risk of inflation heating up again, and that higher inflation may also hurt stock valuations. Cooperman is now clearly deviating from mainstream Wall Street judgment. Most market forecasters are still optimistic about AI demand and the return on related investments. The Nasdaq 100 Index has also risen 19% since this year, and is expected to achieve double-digit gains for the second year in a row.

Individual stock news

SK Hynix (SKHY.US) moved higher before the market and plans to repurchase 40 trillion won of shares through cancellation. SK Hynix said on Wednesday that it will buy back and cancel 40 trillion won (approximately US$28.61 billion) worth of shares. The company said that the share repurchase will begin on August 20 and last for about three months. After the repurchase is completed, all purchased shares will be cancelled. This 40 trillion won share repurchase and cancellation plan is the largest similar transaction in the history of a Korean listed company. Furthermore, SK Hynix clearly stated that it will increase the shareholder return scale from the previous “within 50% of cumulative free cash flow” to “more than 50%.” Shareholder return methods will include a combination of share repurchases and cash dividends. The company also plans to expand dividend policies, including fixed dividends and special dividends. As of press release, SK Hynix's US stock rose more than 3% before the market on Wednesday.

Moderna (MRNA.US) surged ahead of the market, and the phase III trial of the mRNA melanoma skin cancer vaccine was successful. Moderna and MRK.US (MRK.US) announced on Wednesday that the first phase III clinical trial of the personalized mRNA cancer vaccine IntisMeran Autogene in collaboration between the two parties has achieved initial positive results. This marks the first successful phase III trial of mRNA technology in the field of cancer treatment. It is also a major breakthrough in personalized immunotherapy in the history of cancer treatment. According to a joint statement from the two companies, the InterPath-001 phase III trial reached the main end point and a key secondary endpoint — compared with the MSD immunization drug Keytruda alone, the vaccine combined with Keytruda can significantly reduce the risk of recurrence in melanoma patients after surgery and effectively inhibit the spread of tumors to distant organs. This is the first clinical protocol proven to be superior to Keytruda's monotherapy in adjuvant treatment of melanoma, and Keytruda has previously been the standard treatment option for this indication. Moderna CEO Stéphane Bancel said that the product can be approved for sale as soon as 2027, depending on the regulatory review process. He called the results “an extraordinary milestone in mRNA science.” As of press release, Moderna's pre-market share surged more than 95% and MSD surged more than 8% on Wednesday.

Google (GOOGL.US) raised 3.9 billion US dollars in its first Australian dollar bond, adding another wave of intensive financing from global technology companies. US tech giant Google successfully raised 5.5 billion Australian dollars (about 3.89 billion US dollars) through its initial Australian dollar bond issuance, adding another step to the intensive financing wave of global technology companies. According to the list of terms, Google's current offering covers the four types of 3-year, 5-year, 10-year, and 20-year terms, of which the longest term 20-year bond interest rate is 6.9%. This is Google's first entry into the Australian dollar bond market. The cost of financing long-term bonds is close to 7%, or the highest coupon rate record in the company's history. This bond issuance is another financing move by Google after completing the issuance of 25 billion US dollar bonds at the beginning of this month. Global tech companies are increasingly turning to capital markets to finance their huge AI investments, which previously usually relied on their own cash reserves to invest.

Target (TGT.US) Q2 results exceeded expectations and raised full-year guidance. According to financial reports, Target's total Q2 net sales were US$26.54 billion, better than market expectations of US$26.14 billion; net sales increased 5.3% year-on-year to US$25.95 billion; same-store sales increased 3.8% (mainly driven by 3.6% increase in passenger traffic). Adjusted earnings per share were $2.46, better than market expectations of $2.33. Based on better-than-expected performance in the first half of the year, Target raised its full-year performance forecast for FY2026: net sales for the full year are expected to increase by about 5% (1 percentage point higher than the previous guidance); operating profit margin is expected to reach around 6% (including the contribution of about 90 basis points from tariff rebates). GAAP and adjusted EPS are expected to rise to $9.90 to $10.90.

Low.US (LOW.US) Q2 results were mixed, and full-year guidance fell short of expectations. Financial reports show that Lowe's Q2 sales increased 8% year over year to US$26 billion, lower than market expectations of US$26.1 billion; adjusted earnings per share were US$4.40, better than market expectations of US$4.22. Furthermore, the company said it expects full-year profit and revenue to fall within the lower limit of the previously given forecast range. The company currently expects revenue for the fiscal year ending January 2027 to be US$92 billion and adjusted earnings per share of US$12.25, which is lower than market expectations of US$92.9 billion and US$12.43, respectively. This performance has further increased the pressure on Lowe's stock price. The US real estate market is recovering, but high prices are already putting pressure on home improvement spending in 2026. As of press release, Lowe's US stocks fell more than 3% before the market on Wednesday.

KEYS.US (KEYS.US) Q3 earnings report and guidance both exceeded expectations: AI data center demand led to a 56% year-on-year increase in orders. Thanks to the rapid expansion of AI data centers driving demand for its software and testing tools, the electronic design, simulation and testing equipment supplier Dextech's adjusted earnings and revenue per share for the third fiscal quarter were higher than market expectations, and raised the fourth fiscal quarter and full year results guidance. According to financial reports, the company achieved revenue of US$1.85 billion in the third fiscal quarter, up 36.5% year over year, higher than analysts' expectations of US$1.75 billion; adjusted earnings per share were US$3.07, far higher than the forecast of US$2.48. Orders for the third fiscal quarter reached US$2.09 billion, up 56% year on year, and core orders increased 52%, which also far exceeded market expectations of US$1.86 billion. Looking ahead, the company expects adjusted earnings per share for the fourth fiscal quarter to be between $3.34 and $3.40 billion, with revenue between US$1.93 billion and US$1.95 billion, with midpoints of US$3.37 (up about 76% year over year) and US$1.94 billion (up about 37% year over year), respectively. This guidance far exceeds market expectations of US$2.68 and US$1.83 billion.

Key economic data and event forecasts

At 02:00 Beijing time the next day, the Federal Reserve announced the minutes of the monetary policy meeting

Performance Forecast

Thursday pre-market: Walmart (WMT.US), Alibaba (BABA.US), NetEase (NTES.US), Youdao (DAO.US), Futu (FUTU.US), Auto Home (ATHM.US), Daxin Energy (DQ.US), Shinbashi Biotech (NBP.US)