US stock outlook | Futures of the three major stock indexes have mixed ups and downs, AI stocks continue to decline, US PPI and retail will soon be announced in September

Pre-market market trends

1. Before the US stock market on October 15 (Thursday), futures for the three major US stock indexes had mixed ups and downs. As of press release, Dow futures were up 0.28%, S&P 500 futures were down 0.27%, and NASDAQ futures were down 1.24%.

2. As of press release, the German DAX index fell 0.46%, the UK FTSE 100 index rose 0.56%, the French CAC40 index rose 0.18%, and the European Stoxx 50 index fell 0.86%.

3. As of press release, WTI crude oil rose 0.15% to 95.23 US dollars/barrel. Brent crude oil fell 1.31% to $104.67 per barrel.

Market news

The US PPI for September is about to be revealed: the inflationary impact of the sharp rise in diesel prices is far from over. The US Producer Price Index (PPI) for September will be announced at 20:30 Beijing time on Thursday. This data will be an important reference for the market to assess the impact of the sharp rise in diesel prices and its inflationary impact before the November midterm elections. Diesel prices have already risen sharply in August, and there is usually a time difference between transmission of fuel costs from production and transportation to the consumer side, so price pressure on the enterprise side may still be accumulating. Changes in diesel prices are more reflected in PPI than immediately in CPI. Producer price data can provide early clues to the future trend of consumer prices, but previous PPIs have not fully reflected the full impact of diesel price increases. He anticipates that the year-on-year readings of the relevant data for September and October may be significantly higher. This is why PPI received attention on Thursday: the market not only depends on the overall index, but also determines whether rising diesel costs are beginning to affect producer prices more broadly.

The Federal Reserve held on hold in October and added another vote: Daly said there was enough time to make the right decisions. San Francisco Federal Reserve Chairman Mary Daly said that the Federal Reserve may need to raise short-term interest rates further to curb excessive inflation, but she hinted that there was no need to do this at the Federal Reserve's October meeting. In an interview, Daly said, “We are more likely to need further adjustments, but as far as I am concerned, the timing of these adjustments is still an issue we are considering.” “I don't think there is an urgent need to make a decision with limited information. I think we have the time we need.” Regarding the US CPI data for September released on Wednesday, she said that although the initial reaction was “strong” — interest rate futures traders quickly bet on the Federal Reserve's interest rate hike in October — investors “calmed down” after analyzing the data. The rise in gasoline prices contributed to the overall increase, and although underlying inflation remained sticky, it did not rise sharply.

As early as predicting the September rate hike, the “magic operator” changed its rhetoric: the Federal Reserve may go directly up to 50 basis points in December. One forecaster who first predicted the Federal Reserve's latest rate hike now says that December may offer a larger rate hike of 50 basis points. Prestige Economics President Jason Schenk said he believes the Federal Reserve is unlikely to raise interest rates at this month's meeting. Instead, he believes that the Federal Reserve may let the September rate hike “take a breather” before raising interest rates more drastically in December. Schenk said, “By December, if inflation hasn't been contained in a more meaningful way after the September rate hike, they may choose to raise interest rates by 50 basis points instead of 25 basis points and take a bigger bite.” Furthermore, Schenk believes that the Federal Reserve will not get enough information to act again at the October meeting because a large portion of the data released on Wednesday was collected before the Federal Reserve raised interest rates in September. “I don't think there are enough data points to give them the kind of confidence they might need.”

BTIG: Inflation exceeded expectations, but US bond yields “did not rise”, and “interest rates fell along with the NASDAQ” may become the most painful transaction. US investment bank BTIG said that after inflation data was higher than expected, the bond market showed a typical “news failure” (news failure), confirming that US Treasury yields (SHY, TLT, IEF) have reached the tactical top. This change lays a very reverse trap for the stock market — “Interest rates fall, Nasdaq falls instead.” Klinsky warns that the real painful direction of the transaction is exactly the opposite — interest rates are falling at the same time as technology stocks. For investors, this means that the previous unilateral logic of “betting on cutting interest rates and buying technology stocks” may be being replaced by a new combination: falling yield is no longer equivalent to a recovery in risk appetite, but more like repricing growth and profit expectations.

“Big Short” Bury issues another US stock alert: if the “Big Seven” continues to fall and bond yields fall, Wall Street may welcome a “bloody October.” Barry proposed a bearish “bloody October” scenario: if the “Big Seven US stocks” follow the decline in semiconductor stocks and bond yields fall at the same time, then his judgment on this scenario will be firmer. Tech stocks failed to benefit from the fall in US bond yields on Wednesday. Burry pointed out that this phenomenon is worth being wary of. He said, “Although the general opinion in the market is that falling yields are good for stocks, the current painful trading is still falling interest rates and the NASDAQ index falling.” What needs to be observed next is whether the weakness of semiconductor stocks will spread to the “Big Seven US stocks.” Burry said, “We have seen semiconductor stocks fall at the same time as interest rates, but if we finally see that the 'Big Seven US Stocks' also follow the fall in interest rates, then this will further strengthen our judgment on 'Scarlet October. '”

J.P. Morgan warns: This round of collapse in technology stocks is very different from July! Retail investors gave up scavenging, and the ammunition was exhausted. According to J.P. Morgan Chase's latest research report, the current decline environment for AI infrastructure stocks is clearly worse than the July adjustment. Retail investors have so far lacked “bargain buying” behavior, compounded by multiple adverse factors such as cliffs in repurchase traffic, scarce short positions, and high leveraged ETF sizes, making the technical support base for this round of rebound far weaker than the previous one. The team led by strategist Nikolaos Panigirtzoglou came to the conclusion after comparing key indicators such as capital flows, short positions, ETF structures, and corporate repurchases one by one: the current market lacks many key catalysts for rapid stock price recovery after the July round of adjustments. At the same time, the report pointed out that despite the recent correction, cyclical stocks have not entered the oversold range from the perspective of positions and capital flow, which means that downside risks are still considerable. The full recovery of cyclical stocks requires the combination of multiple conditions such as declining bond yields, strong profits, and stable labor markets.

Individual stock news

The wave of AI stock sell-off continues. Before the US stock market on Thursday, as of press release, chip stocks were generally down. SK Hynix (SKHY.US) fell more than 7%, SanDisk (SNDK.US), Western Digital (STX.US) fell more than 5%, Micron (MU.US) fell nearly 5%, Intel (INTC.US) fell more than 4%, AMD (AMD.US) fell more than 3%, and Qualcomm (QCOM.US), Nvidia (NVDA.US), and Broadcom (AVGO.US) all fell nearly 2%. Optical Communications stocks also suffered setbacks: AXT Inc (AXT.US) fell more than 7%, Credo Technology (CRDO.US) fell more than 6%, Coherent (COHR.US) fell more than 5%, and Mwell (MRVL.US), Astera Labs (ALAB.US), Corning (GLW.US), and Lumentum (LITE.US) all fell more than 4%. Stocks in the AI infrastructure sector, which were mainly sold off on Wednesday, continued their pre-market decline: CoreWeave (CRWV.US) fell nearly 7%, Nebius (NBIS.US) fell more than 4%, Oracle (ORCL.US) fell more than 2%, and Dell Technologies (DELL.US) fell more than 4%.

TSM.US Q3 net profit increased 68.7% year-on-year, exceeding expectations! AI orders flooded in, and the 2nm process contributed 8% to wafer revenue. Driven by the continued influx of AI orders, TSMC's Q3 consolidated revenue was NT$1.4942 trillion (US$46.72 billion), up 50.9% year on year and 17.6% month on month, exceeding the company's own financial range of 44.6 billion to 45.8 billion US dollars; net profit to mother was NT$763.06 billion, up 68.7% year on year and 8.0% month on month, breaking the single-quarter record for the sixth consecutive quarter. This is also the 11th consecutive quarter of profit growth; diluted earnings per share of NT$29.43, higher than the market estimate of approximately NT$28.3 billion. Fourth-quarter revenue guidance was $52.3-54.3 billion — the median increase of about 14% over the third quarter, far higher than the market estimate of $50.35 billion. By process, the most advanced 2 nm shipments accounted for 8% of wafer sales in the third quarter (3% in the previous quarter), 3 nm accounted for 33%, 5 nm accounted for 28%, 7 nm accounted for 10%, and advanced manufacturing processes (7 nm and below) accounted for 79% in total — the sharp rise in volume and price of advanced nodes is the core of revenue exceeding expectations. As of press release, TSMC's US stocks fell more than 2% in the premarket on Thursday.

Mobile network devices are in strong demand! Ericsson (ERIC.US)'s Q3 earnings exceeded expectations, but component costs are likely to weigh down next year's gross profit margin. Ericsson's third-quarter earnings exceeded analysts' expectations, mainly benefiting from strong demand for mobile network devices in the core market. However, the company also indicated that parts costs will put pressure on gross margins next year. According to financial data, Ericsson's GAAP earnings per share for the third quarter were SEK 1.77, SEK 0.22 higher than analysts' expectations; revenue was SEK 59.5 billion, up 6% year over year, and SEK 4.17 billion higher than analysts' expectations. The adjusted gross margin was 47.7%, compared to 48.1% for the same period last year. The adjusted profit before interest, tax and amortization (EBITA) was SEK 10.1 billion (approximately USD 1 billion), higher than analysts' average estimate of SEK 7.93 billion. However, this indicator is lower than SEK 15.8 billion in the same period last year; the adjusted EBITA margin was 17.0% compared to 28.1% in the same period last year. The company explained that capital gains of SEK 7.6 billion were included in the same period last year. After excluding this factor, adjusted EBITA grew. As of press release, Ericsson's US stock rose nearly 12% before the market on Thursday.

AI that arrived two years late: Rumor has it that Apple (AAPL.US) Apple Intelligence entered the Chinese market in December, and the prospects for “shrinking” the first batch of features are questionable. Multiple sources familiar with the matter revealed that Apple plans to officially launch its artificial intelligence platform, Apple Intelligence (Apple Intelligence), in China in December of this year with the iOS 27.3 system update, which means that after a long period of regulatory approval, the service will finally enter one of Apple's most important markets. This launch will cover the first batch of AI features first launched in the US market two years ago, including Genmoji's custom emoticons, notification summaries, writing tools, and a “clean up” function to remove specific objects from photos, covering the three major devices of iPhone, iPad, and Mac. However, the new Siri AI assistant released this year and other new features will not be part of this lineup. Apple previously anticipated that the Chinese version of AI would be released in May 2025, then postponed until the end of 2025, then postponed again until this spring.

Another ticket skipping! The first flight of the Rocket Lab (RKLB.US) Neutron rocket was postponed to 2027, and pre-market stock prices plummeted. Rocket Lab has once again postponed the first flight plan for its new high-thrust rocket, Neutron, and delayed the first launch of the rocket until 2027. This is the latest in a series of delays for the Neutron project. Approaching the launch preparation stage, the company discovered a new problem in the rocket fuel tank manufacturing process, which caused this delay. Rocket Lab currently mainly operates a rocket called Electron, which focuses on launching small satellites into orbit. Neutron, on the other hand, is positioned as a launch vehicle with greatly upgraded performance, which can carry heavier loads and compete more directly with the Falcon 9 rocket, which SpaceX dominates. As of press release, Rocket Lab's US stock fell nearly 10% before the market on Thursday.

Key economic data and event forecasts

20:30 Beijing time US September PPI

Number of jobless claims in the US at 20:30 Beijing time at the beginning of the week ending October 10

Monthly rate of retail sales in the US in September at 20:30 Beijing time

Performance Forecast

Friday morning: Alcoa (AA.US), Yingtou Securities (IBKR.US)