US stock outlook | Futures of the three major stock indexes plummeted, 10-year US Treasury yields stood at 5%, and crypto stocks fell before the market

Pre-market market trends

1. On September 15 (Tuesday), the futures of the three major US stock indexes fell sharply before the US stock market. As of press release, Dow futures were down 0.27%, S&P 500 futures were down 0.15%, and NASDAQ futures were down 0.07%.

2. As of press release, the German DAX index rose 0.01%, the UK FTSE 100 index fell 0.33%, the French CAC40 index fell 0.27%, and the European Stoxx 50 index fell 0.17%.

3. As of press release, WTI crude oil rose 0.92% to $102.32 per barrel. Brent crude rose 0.24% to $105.93 per barrel.

Market news

The 10-year US Treasury yield surpassed 5% and hit a 20-year high, and the Fed's anti-inflation credit is facing a major test. As of press release, the 10-year US Treasury yield was 5.007%, rising to 5.047% during the day; the 30-year US Treasury yield was 5.373%, hitting 5.400% during the day. Pressure on the bond market heightened the tense situation ahead of the Federal Reserve's interest rate decision on Wednesday. Investors expect Federal Reserve officials to raise short-term borrowing costs for the first time since July 2023. If the Federal Reserve does not raise interest rates, or if Federal Reserve Chairman Kevin Walsh suggests that monetary tightening in the next few months will be less intense than the current price in the money market, bond investors may demand higher yields to withstand the risk of inflation. BMO capital market strategist Will Hartman said, “If the Federal Reserve keeps interest rates unchanged this week, it will most likely damage its credibility in fighting inflation. “The market is not only vulnerable to unexpected setbacks, but also vulnerable to 'dovish interest rate hires' — that is, bitmaps or press conferences send a signal of more patience.” Dalip Singh, chief global economist at PGIM Credit, said, “The more the Federal Reserve can demonstrate its inflationary resilience, the more likely it is to reduce the risk premium at the back end of the US debt curve in the medium term.”

Have chip stocks become a “painful deal”? Wall Street turned to betting on the next beneficial direction. The AI security storm is suddenly rewriting Wall Street deals. Investors are recalculating another possibility: if model training slows down, computing power transactions may cool down, while identity management, data governance, and cyber defense will instead usher in a larger spending cycle? Evercore ISI analyst Kirk Marton believes that no matter how quickly AI agents enter the enterprise, they must be protected, governed, and monitored. As a result, even if AI training slows down, structural requirements for cybersecurity and some infrastructure software still exist. Jefferies analyst Joseph Gallo predicts that the smart AI security market is still in its early stages, initial business signals may appear in late 2026, and significant revenue contributions are more likely to occur after 2027. He believes that identity security vendors may become one of the earliest beneficiaries, because with the increase in AI agents, enterprises must control machine identity, access rights, and data call scope.

Bank of America: Building a bullish flag in the S&P 500 consolidation, the long-term target is still above 8,000 points. Bank of America technical analysts insist on bullish long-term gains, believing that the S&P 500 index is expected to rise above 8,000 points, even though a series of recent market and macro headwinds are testing investor confidence. After breaking through the weekly pennant pattern in early August, the benchmark index has successfully hit the Bank of America's previously set target of 7,741 points for the next year. Technical strategist Paul Ciana pointed out in the client report that as long as the index maintains a key support of 7,500 points, the broader upward trend will remain intact. Ciana said that recent price consolidation is forming a potential bullish flag on the daily chart, and a decisive settlement above the resistance range of 7760 to 7770 points will confirm this pattern. A successful break through this level will re-open the 8,000 and 8,234 point upward targets, while the long-term forecast is to reach 8541 points. At the same time, Ciana warned that failure to hold the 7504 to 7,500 point support area would mark a major technical break and could start an initial retracement to 7314 to 7,294 points. If it continues to weaken, it will increase the risk of a deeper retracement. The rising 200-day moving average will be lowered by about 7,200 points, and it may even fall to the 7,000 point key breakthrough area.

The Federal Reserve's interest rate hike is approaching, and the S&P 500 is likely to drop 10%! MRA strategist: There's even a second wave in December. Macro Risk Advisors LLC said that the interest rate hike that the Federal Reserve may start as early as this week may trigger a correction in the S&P 500 index because falling corporate profit margins will hurt profit prospects, and the market is preparing for an austerity cycle. The agency's founder and CEO Dean Connacht said that if interest rate hikes are implemented on Wednesday, the market will be under greater pressure. He wrote, “We expect the S&P 500 index to pull back 8% to 10% and possibly see a second round of decline in December.” He said that interest rate hikes would “squeeze the profit margins of companies that are unable to pass on costs,” and at the same time have a volatility impact on a market that is unprepared for it. Knut said that the current market pattern is similar to what investors saw in 2018. At that time, the S&P 500 peaked in September and then plummeted 10% cumulatively in October and November. Knut warned that “there was no Christmas market” that year, and the market experienced another wave of decline in December, eventually falling nearly 20% from its peak.

Is the “copper rush” quenching the fever? LME now has the biggest delivery in nearly four weeks, and the copper price has retreated to 14,000 US dollars. Since soaring to a record high last week, copper prices have fallen sharply. At the time, traders switched supply to the US just before the expected imposition of tariffs on refined copper, causing supply shortages in other parts of the world. So far, however, this tariff measure has not been implemented. As of press release, London Metal Exchange (LME) copper futures were reported at $14030 per tonne. On Monday, the London Metal Exchange warehouse ushered in the largest copper delivery in nearly four weeks. Three-month copper is converted to a premium of $85.75 per tonne over spot copper. This market structure is known as a “futures rise” (contango) and usually means there is plenty of supply.

Individual stock news

Musk fueled Tesla (TSLA.US) and SpaceX (SPCX.US) combined speculations and “hinted” to act in “close cooperation.” Tesla and SpaceX shares rose slightly before the market on Tuesday, after CEO Elon Musk refused to rule out the possibility of a merger between the two companies, reigniting speculation that spread from retail investors to Wall Street. When asked at the All-in summit why Tesla and SpaceX remain independent despite their increasingly close relationship, Musk called it a “good question” and hinted that the relationship between the two could eventually prompt action. Musk said, “With all this collaboration on so many levels, who can imagine what actions might be taken when there is such close cooperation in so many fields.”

The CEO of Broadcom (AVGO.US) fought back against the “AI brake theory”: the revenue target for AI semiconductors remains unchanged, reaching 230 billion US dollars in 2028. The debate over whether to put the brakes on the development of cutting-edge AI models continues to ferment across the industry. Following Nvidia (NVDA.US) CEO Huang Renxun directly opposed the “AI braking theory” at an event, Broadcom CEO Chen Fuyang also tried to downplay related concerns. In an interview, Chen Fuyang recently responded to concerns about the possible slowdown in the development of cutting-edge AI models on the chipmaker's business, and emphasized that the company is still sticking to its long-term revenue goals. When discussing AI security issues with the host at the Los Angeles All-In Summit on Monday, Hwang In-hoon clearly denied the prediction that “AI could destroy the world” and believed that such statements “have no scientific basis.” The week before, Hwang In-hoon also said something quite sharp: The fear surrounding AI security is probably just creating business opportunities for the cybersecurity industry — “What else can create demand more than creating a problem?”

Micron (MU.US) AI dividend distribution escalates in battle? Trade unions in Taiwan threatened a strike, and HBM supplies or sounded the alarm. A Taiwanese trade union representing Micron Technology employees warned on Tuesday that unless the US memory chip maker agrees to establish a permanent profit-sharing system, it could go on strike, further escalating the labor dispute at its largest manufacturing center. The union said it is seeking a long-term, transparent and verifiable profit-sharing system rather than a one-time reward, and reiterated its demand that 15% of Micron's operating profits be distributed to global employees. Taiwan is a key production center for Micron DRAM and high-bandwidth memory (HBM) chips, which are the core components of AI servers. Although no strike has been announced and production has not been affected, any labor action could heighten supply concerns in the already tight memory chip market.

Key procedural voting on the Clarity Act is imminent! Crypto stocks such as Circle (CRCL.US) and Coinbase (COIN.US) declined before the market. As of press release, before the US stock market on Tuesday, Circle and Coinbase fell nearly 5%, and Strategy (MSTR.US) fell nearly 4%. According to reports, the US Senate is scheduled to hold a key procedural vote on the Digital Asset Market Clarity Act (CLARITY Act) at 2:15 p.m. EST on Tuesday. At least 60 votes are required to enter the follow-up process. The bill aims to establish a new regulatory framework for cryptocurrencies and other digital assets. The Republican Party currently holds 53 seats, so the outcome will depend on the Democrats. However, crypto journalist Eleanor Terrett posted on X on Monday that a group of Senate Democrats will meet that night to discuss a counterproposal.

Rocket Lab (RKLB.US) CFO: The acquisition of Iridium Communications (IRDM.US) will “double overnight” the company's size, and more deals may follow. Rocket Lab expects its proposed deal to acquire Iridium Communications will double the size of the company “overnight.” As the space company prepares to use this deal as a springboard to further expand its orbital applications and constellation business, its broader expansion plans are also underway. The company's CFO Adam Spice said during World Space Business Week that Iridium Communications will fill a missing link in the company's transformation from a launch service provider to a fully integrated space operator. He said Rocket Lab's “very healthy market capitalization” helped the company advance the acquisition of a company almost the size of its own. In turn, continued execution of the company's strategy should allow Rocket Lab to continue to receive financing for internal investments and future transactions. As of press release, Rocket Lab's US stock rose more than 2% before the market on Tuesday.

Key economic data and event forecasts

20:30 Beijing time US New York Federal Reserve Manufacturing Index for September

Performance Forecast

Wednesday morning: Ctrip (TCOM.US)