US stock outlook | Futures of the three major stock indexes plummeted, oil prices jumped, Google and Tesla's performance fell after the market, and Intel released financial reports after the market

Pre-market market trends

1. On July 23 (Thursday), the futures of the three major US stock indexes fell sharply before the US stock market. As of press release, Dow futures were down 0.60%, S&P 500 futures were down 0.59%, and NASDAQ futures were down 0.83%.

2. As of press release, the German DAX index fell 0.87%, the UK FTSE 100 index fell 0.27%, the French CAC40 index fell 1.27%, and the European Stoxx 50 index fell 1.05%.

3. As of press release, WTI crude oil rose 4.57% to $90.80 per barrel. Brent crude rose 4.96% to $98.74 per barrel.

Market news

Red Sea oil tanker hit by missile for the first time! Alternative waterways were blocked, and oil prices jumped. Crude oil prices soared after Iran-backed Houthi militants said they had attacked two Saudi oil tankers in the Red Sea. The move intensified conflict in the Middle East and threatened deeper supply disruptions. Earlier this week, the Houthis threatened to block Saudi shipping in the Red Sea. The waterway has become an important alternative export route that Saudi Arabia increasingly relies on to bypass the Strait of Hormuz, and the escalation of the situation threatens millions of barrels of crude oil supplies flowing to customers around the world every day. International market service agency Kopler said in a social media post on the 22nd that traffic volume of the two major international energy transportation channels, the Strait of Hormuz and the Strait of Mander, both declined on the 21st. Hormuz and the Strait of Mander are under pressure at the same time. Combined with reduced inventory buffers and rising refining pressure, the energy shock may further drag down global economic recovery.

Will the “Federal Reserve's Favorite Inflation Index” be revised to add momentum to the suspension of interest rate hikes? The US Bureau of Economic Analysis (BEA) plans to adjust the calculation method for the Personal Consumer Expense Price Index (PCE), covering three categories: portfolio management expenses, computer software, and legal services. BEA announced the adjustment plan on June 24, and the new method will officially take effect on September 30. The market expects that the adjusted core PCE inflation growth rate may be 0.2 to 0.3 percentage points lower than the previous data. Currently, the core PCE price index has risen 3.4% year over year in the 12 months to May; after adjustment, this figure may fall to 3.2% or even 3.1%. This change may provide more grounds for US Federal Reserve officials who are inclined to suspend interest rate hikes, but it is not enough to change the reality that inflation is still above target. The Federal Reserve aims to reduce the annual inflation rate to 2%, and the core PCE is still significantly above this level regardless of the pre- and post-adjustment calculation methods.

The semiconductor rebound is being questioned: is it worth bottoming out under high volatility? Semiconductor stocks recently rebounded after a month of adjustments. However, investors clearly disagree about the continuation of the semiconductor stock rebound. On the one hand, the options market warns that short-term fluctuations are extremely high, and on the other hand, investment banks are optimistic about rearrangement opportunities based on historical retracements and seasonal factors. Adam Turnquist, chief market strategist at LPL Financial, said the semiconductor volatility index is still at an “extremely high level,” especially when compared to VIX, which measures the volatility of the S&P 500 index. Vaneck Semiconductor ETF (SMH) investors may still face significant fluctuations in the short term. Meanwhile, the Bank of America trading department believes that after experiencing a return in profits, the current price level of US momentum stocks is already attractive, and advises customers to pay attention to this sector again. The UBS (UBS) trading department also said earlier this week that the decline in momentum stocks may be nearing its end, and investors may start re-establishing AI and semiconductor stock positions.

“Wall Street Air God” Paulson: Gold's long-term bull market has just begun; gold mining stocks are the real code for huge profits. Billionaire hedge fund manager Paulson, who became famous due to shorting the US subprime mortgage crisis and then accurately bullish on gold, recently said that gold is currently in the early stages of a long-term bull market. Paulson said, “I really think we are at the beginning or early stages of a long-term bullish market for gold. As people lose confidence in banknotes, gold will continue to grow in value as an alternative asset.” He further explained that gold is becoming the most important reserve currency in the world, gradually replacing fiat money, and the global central bank and private sector demand for physical gold continues to expand. In terms of investment strategy, Paulson believes that compared to holding physical gold, investors will receive more generous returns from gold mining stocks, especially large companies with large untapped reserves.

Barclays announced the advent of the “golden age” of technology IPOs: AI innovation cycles in multiple fields rarely overlap, and market acceptance capacity is higher than the peak listing period in 2021. The global tech IPO market is at a historic turning point. Jamie Turturici, head of equity capital markets at Technology, Media and Telecom (TMT) at Barclays Bank, called the current tech IPO market a “golden age,” saying “I've never seen so many cycles of innovation happen simultaneously” in his career. Turturici pointed out that the current group of technology companies flocking to the open market is far more than the core field of artificial intelligence, but covers six major sectors, including power infrastructure, data centers, robotics, automation, defense technology, and space. He described the current phase as roughly the third year in a typical 5 to 6 year IPO cycle. Furthermore, Turturici believes that market concerns about absorbing surging supply have been exaggerated.

Individual stock news

Google (GOOGL.US) Q2 Cloud's revenue soared 82%, but capital expenditure soared to US$205 billion. For the first time in history, negative cash flow frightened the market. According to financial reports, Google's second-quarter revenue increased 24% year over year to 119.8 billion US dollars, higher than the market estimate of 117.02 billion US dollars. Among them, Google Cloud's revenue was 24.77 billion US dollars, surging 82% year on year, higher than the market estimate of 22.46 billion US dollars; service revenue was 94.54 billion US dollars, and the market estimate was 94.32 billion US dollars. In terms of profit, operating profit for the second quarter was US$40.77 billion, a sharp increase of 30% over the previous year, higher than the market estimate of US$40.55 billion; adjusted earnings per share were US$9.11 (including fair value income from equity investment of US$6.26 per share), which was much higher than the market estimate of US$2.88. Meanwhile, Google's capital expenditure for the second quarter was US$44.92 billion, exceeding market expectations of US$44.15 billion, far higher than US$22.446 billion in the same period last year, reflecting the company's continued large-scale investment in data centers, AI servers, and computing power facilities. As related expenses increased rapidly, Google's free cash flow in the second quarter turned negative at $5.9 billion, the first negative in decades, and lower than market expectations. Google raised its capital expenditure guidance for the full year 2026 from 180 billion to 190 billion US dollars to 1950 billion to 205 billion US dollars. At the same time, it also expects capital expenditure to increase significantly in 2027. As of press release, Google's US stocks fell more than 4% in the premarket on Thursday.

Tesla (TSLA.US) Q2 net profit fell short of expectations, gross margin declined further, and free cash flow turned negative. According to financial reports, Tesla achieved revenue of 28.24 billion US dollars in the second quarter, exceeding market expectations and increasing 26% year on year. This is the first time in three years that revenue has increased by more than 20% year on year. However, operating profit for the second quarter was only US$398 million, far below market expectations of US$1.39 billion; adjusted earnings per share were $0.33, down 18% year on year, and fell far short of expectations; gross margin was 16.8%, lower than analysts' expectations of 19.4%. Notably, Tesla's free cash flow for the second quarter was -1.09 billion US dollars, the first negative in a single quarter since the first quarter of 2024. Tesla executives said that the negative free cash flow was due to capital expenditure doubling month-on-month in the second quarter. It is expected that capital expenditure will continue to grow over the next two to three years, and reiterated that this year's capital expenditure will exceed 25 billion US dollars. Tesla clearly stated in its earnings announcement that the company is in the largest and most exciting investment stage. It still needs to make great efforts in the future. It is committed to using AI technology to transform the fields of transportation, energy and productivity. The expansion of business scale will show non-linear characteristics, and the company will always focus on creating long-term value. This statement suggests that the pace of massive investment will not slow down, and the pressure on the profit side will increase. As of press release, Tesla's US stocks fell more than 6% before the market on Thursday.

Texas Instruments (TXN.US)'s Q2 revenue and profit both exceeded expectations. The Q3 guidelines were optimistic, but the 70% increase during the year was “afraid of going high” and the market voted with their feet. Although the third-quarter revenue guidance issued by Texas Instruments, the world's largest manufacturer of analog chips and embedded processors, exceeded market expectations, it failed to ignite investor enthusiasm — the company's stock price has risen sharply this year, and market expectations have soared. Texas Instruments second-quarter revenue increased 23% year over year to US$5.46 billion, better than market expectations of US$5.24 billion; earnings per share were US$2.14, which also exceeded market expectations. The company expects revenue for the third quarter to be between US$5.65 billion and US$6.15 billion, with an average analyst estimate of US$5.62 billion. This outlook shows that the company is becoming one of the main beneficiaries of the wave of artificial intelligence spending; at the same time, the recovery in demand for chips in the company's traditional basic automotive and industrial equipment sectors is also adding color to the performance. As of press release, Texas Instruments US stocks fell more than 3% in the premarket on Thursday.

The “blue giant” IBM (IBM.US) transformation hit an obstacle: mainframe sales plummeted by 42%! Revenue expectations for the full year were lowered to 4%-5% growth. IBM lowered its revenue forecast for the full year, while reducing the annual sales growth rate of the software business, which the market is particularly concerned about, mainly due to a marked decline in demand for its mainframe business. Financial reports show that IBM's second-quarter revenue was about US$17.2 billion, up about 1% year on year; mainframe sales fell 42% month on month. Adjusted earnings per share were $2.93. The company expects revenue growth of 4% to 5% for the full year of 2026, which is lower than the previous “more than 5%” guideline; Chief Financial Officer Jim Kavanaugh revealed that the annual revenue growth rate of the software business is expected to be in the range of 6% to 8%. CEO Arvind Krishna admits that in the last few weeks of June, customers suddenly switched quarterly capital expenses to server, storage, and memory purchases to lock in tight supply of AI infrastructure before expected price increases; the company “did not anticipate such a significant amount of capital expenditure realignment”, and several large-scale transactions failed to be completed as expected. As of press release, IBM's US stocks fell more than 1% before the market on Thursday.

The AI data center business has become a new growth engine, and Nokia (NOK.US) Q2 profit surpassed expectations. Nokia's second-quarter profit greatly exceeded market expectations, and the Finnish communications equipment manufacturer made efforts to lay out the data center hardware business, which boosted sales growth. Nokia announced on Thursday that net sales for the second quarter increased 8% year on year to 4.8 billion euros, in line with analysts' expectations; adjusted operating profit increased 18% year over year to 434 million euros (about 496 million US dollars), and analysts' average forecast was 372.3 million euros. According to the data, in the second quarter, sales of the network infrastructure sector, which covers the AI data center connection business, increased 12% year-on-year to 2,037 billion euros at a fixed exchange rate. Among them, sales of the optical network business increased by 20%, and sales of the IP network business increased by 16%. Net sales to AI and cloud customers increased 105%.

Fuel prices at Middle East conflict points! The refining and trading business helped Total (TTE.US) net profit soar 68% in Q2. French energy giant Total said that due to the Middle East war driving up the prices of crude oil and refined oil products, offsetting the impact of the decline in profits in the natural gas business, the company's profit increased sharply in the second quarter. Total said in a statement on Thursday that adjusted net profit for the second quarter increased 68% year over year to reach $6.03 billion. This result was largely in line with analysts' expectations. Total will pay shareholders an interim dividend for the second quarter of €0.90 (approximately US$1.03) per share, an increase of 5.9% over the same period last year. The company also plans to repurchase up to $1.5 billion of shares in the third quarter, in line with the size of the previous three quarters. As of press release, Total's US stocks rose nearly 3% in the premarket on Thursday.

Southwest Airlines (LUV.US)'s Q2 performance was mixed, and the full-year EPS guidance exceeded expectations. According to financial reports, Southwest Airlines' Q2 revenue increased 16.4% year over year to US$8.43 billion, lower than market expectations of US$8.58 billion; adjusted earnings per share were $0.94, far exceeding market expectations of US$0.51. Looking ahead to the third quarter, Southwest Airlines expects adjusted earnings per share to be between $0.5 and $0.75, and the market expects $0.8. For the full year of 2026, the company expects adjusted earnings per share to be between $3.25 and $4.25, and the market expects $3.13. As of press release, Southwest Airlines's US stocks fell more than 3% in the premarket on Thursday.

American Airlines (AAL.US)'s Q2 results exceeded expectations, and Q3 profit guidance fell short of expectations. Financial reports showed that American Airlines' second-quarter revenue was US$16.735 billion, higher than market expectations of US$16.707 billion; adjusted earnings per share were $0.15, higher than the market forecast of US$0.03. The company's fuel costs increased by more than $2.2 billion in the second quarter, up 83% year over year. American Airlines expects adjusted earnings per share for the third quarter to be -0.7 to -0.1 dollars, while the market forecast is 0.28 dollars. As of press release, American Airlines dropped nearly 4% in the premarket on Thursday.

Countdown to Starship's 13th test flight! The key flight affected SpaceX (SPCX.US) space ambitions and trillion valuation. After abandoning the launch attempt last week, SpaceX will attempt another major test of its giant Starship (Starship) rocket on Thursday. This incident will allow investors to face the risks posed by the company's turbulent R&D cycle, and further raise the level of attention to this critical milestone. This Starship flight test is the rocket's 13th flight, and the first flight test since SpaceX completed its largest IPO in history in June. Regarding the 13th test flight of the Starship, the capital market is really concerned not only about whether the mission will eventually be called “successful” or “partially successful,” but also to confirm whether the problems that have already been revealed have been solved and whether the Starship is gradually getting closer to actual use after a round of test flights.

Key economic data and event forecasts

Number of jobless claims in the US at 20:30 Beijing time at the beginning of the week ending July 18

Performance Forecast

Friday morning: Intel (INTC.US), Newman Mining (NEM.US), SAP (SAP.US)

Friday pre-market: American Express (AXP.US), New Era Energy (NEE.US), Verizon (VZ.US)