Pre-Market Market Trends

As of July 23 (Thursday), U.S. stock index futures are all down before the market opens. As of the time of writing, Dow futures are down 0.60%, S&P 500 futures are down 0.59%, and Nasdaq futures are down 0.83%.

As of the time of writing, the German DAX index is down 0.87%, the UK FTSE 100 index is down 0.27%, the French CAC 40 index is down 1.27%, and the Euro Stoxx 50 index is down 1.05%.

As of the time of writing, WTI crude oil is up 4.57%, priced at $90.80 per barrel. Brent crude oil is up 4.96%, priced at $98.74 per barrel.

Market News

Red Sea oil tankers first attacked by missiles! Alternative shipping routes obstructed, oil prices surge. Oil prices soared after Iran-backed Houthi militants claimed to have attacked two Saudi oil tankers in the Red Sea. This escalates tensions in the Middle East and threatens deeper supply disruptions. Earlier this week, the Houthis threatened to blockade Saudi shipping in the Red Sea. This waterway has become an increasingly important alternative export route for Saudi Arabia to bypass the Strait of Hormuz, and the escalation threatens millions of barrels of crude oil supplies flowing to global customers daily. International market service provider Kpler stated on social media on the 22nd that the shipping volumes through the two major international energy transport channels, the Strait of Hormuz and the Bab-el-Mandeb Strait, both declined on the 21st. The pressures on both the Strait of Hormuz and the Bab-el-Mandeb Strait, combined with reduced inventory buffers and rising refining pressures, could further hinder global economic recovery.

“The Fed's favorite inflation indicator” to be revised, adding confidence to pause rate hikes? The Bureau of Economic Analysis (BEA) plans to adjust the calculation method for the Personal Consumption Expenditures (PCE) price index, involving three categories: portfolio management fees, computer software, and legal services. The 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 rate may decrease by 0.2 to 0.3 percentage points compared to previous data. Currently, the core PCE price index has risen 3.4% year-on-year for the 12 months ending in May; after adjustment, this figure may drop to 3.2% or even 3.1%. This change may provide more basis for Fed officials inclined to pause rate hikes, but it does not change the reality that inflation remains above target. The Fed's goal is to reduce the annual inflation rate to 2%, and whether using the pre-adjustment or post-adjustment calculation method, the core PCE remains significantly above this level The Semiconductor Rebound Faces Scrutiny: Is It Worth Bottom-Fishing Amid High Volatility? Semiconductor stocks have rebounded recently after a month of adjustment. However, investors show significant disagreement regarding the sustainability of this rebound. On one hand, the options market indicates a warning of extreme short-term volatility, while on the other hand, investment banks see opportunities for reallocation based on historical pullbacks and seasonal factors. Adam Turnquist, Chief Market Strategist at LPL Financial, stated that the semiconductor volatility index remains at an "extremely high level," especially when compared to the VIX, which measures the volatility of the S&P 500 index. In the short term, investors in the VanEck Semiconductor ETF (SMH) may still face significant fluctuations. Meanwhile, Bank of America’s trading department believes that U.S. momentum stocks have become attractive at current price levels after profit-taking and suggests that clients refocus on this sector. UBS's trading department also indicated earlier this week that the decline in momentum stocks may be nearing its end, and investors could begin to rebuild positions in AI and semiconductor stocks.

"Wall Street's Bear" Paulson: The Long-Term Bull Market for Gold Has Just Begun, and Gold Mining Stocks Are the Real Profit Secret. Billionaire hedge fund manager Paulson, who gained fame for shorting the U.S. subprime mortgage crisis and later accurately predicting a bullish trend in gold, recently stated that gold is currently in the early stages of a long-term bull market. Paulson noted, "I truly believe we are at the starting point or early stage of a long-term bull market for gold. As people lose confidence in paper currency, gold as an alternative asset will continue to appreciate." He further explained that gold is becoming the world's most important reserve currency, gradually replacing fiat currency, with demand for physical gold from global central banks and the private sector continuing to expand. In terms of investment strategy, Paulson believes that investors will achieve greater returns from gold mining stocks compared to holding physical gold, especially those large companies with significant undeveloped reserves.

Barclays Declares the Arrival of a "Golden Era" for Tech IPOs: Rare Overlap of AI Innovation Cycles Across Multiple Fields, Market Absorption Capacity Exceeds the 2021 Listing Peak. The global tech IPO market stands at a historic turning point. Jamie Turturici, Head of Technology, Media, and Telecommunications (TMT) Equity Capital Markets at Barclays, describes the current tech IPO market as a "golden era," stating that he has "never seen so many innovation cycles occurring simultaneously" in his career. Turturici pointed out that the group of tech companies heading to the public market now extends far beyond the core field of artificial intelligence, encompassing six major sectors: power infrastructure, data centers, robotics, automation, defense technology, and space. He describes the current phase as approximately the third year of a typical 5 to 6-year IPO cycle. Additionally, Turturici believes that concerns about the market's ability to absorb the surge in supply are exaggerated.

Individual Stock News

Google (GOOGL.US) Q2 Cloud Revenue Soars 82%, Capital Expenditures Set to Surge to $205 Billion, Historic Negative Cash Flow Shocks the Market. The financial report shows that Google’s second-quarter revenue grew 24% year-on-year to $119.8 billion, exceeding market expectations of $117.02 billion. Among them, Google Cloud revenue reached $24.77 billion, soaring 82% year-on-year, surpassing market expectations of $22.46 billion; Service revenue was $94.54 billion, with market expectations at $94.32 billion. In terms of profit, the operating profit for the second quarter was $40.77 billion, a significant year-on-year increase of 30%, exceeding the market estimate of $40.55 billion; the adjusted earnings per share were $9.11 (including a fair value gain of $6.26 per share from equity investments), far exceeding the market estimate of $2.88. Meanwhile, Google's capital expenditure for the second quarter was $44.92 billion, surpassing the market expectation of $44.15 billion and significantly higher than $22.446 billion in the same period last year, reflecting the company's continued large-scale investments in data centers, AI servers, and computing facilities. With related expenses rapidly increasing, Google's free cash flow turned negative at -$5.9 billion for the second quarter, marking the first negative figure in decades and falling short of market expectations. Google raised its full-year capital expenditure guidance for 2026 from the previous $180 billion to $190 billion to $195 billion to $205 billion, while also expecting significant increases in capital expenditure for 2027. As of the time of writing, Google's stock fell over 4% in pre-market trading on Thursday.

Tesla (TSLA.US) Q2 net profit missed expectations and gross margin further declined, free cash flow turned negative. The financial report showed that Tesla achieved revenue of $28.24 billion in the second quarter, exceeding market expectations with a year-on-year growth of 26%, marking the first time in three years that revenue growth exceeded 20% year-on-year. However, the operating profit for the second quarter was only $398 million, far below the market expectation of $1.39 billion; the adjusted earnings per share were $0.33, an 18% year-on-year decline, also significantly below expectations; the gross margin was 16.8%, lower than the analyst expectation of 19.4%. Notably, Tesla's free cash flow for the second quarter was -$1.09 billion, marking the first quarterly negative figure since Q1 2024. Tesla executives stated that the negative free cash flow was due to capital expenditures more than doubling quarter-on-quarter in the second quarter, and they expect capital expenditures to continue to grow over the next two to three years, reiterating that capital expenditures will exceed $25 billion this year. Tesla explicitly stated in its earnings announcement that the company is in the largest and most exciting investment phase, and significant efforts will still be needed to leverage AI technology to transform transportation, energy, and productivity sectors, with business scale expansion expected to exhibit non-linear characteristics, and the company remains focused on creating long-term value. This statement suggests that the pace of large-scale investments will not slow down, and the pressure on profitability will be amplified. As of the time of writing, Tesla's stock fell over 6% in pre-market trading on Thursday.

Texas Instruments (TXN.US) Q2 revenue and profit both exceeded expectations, Q3 guidance is optimistic, but the market is "worried" about the 70% increase this year. Texas Instruments, the world's largest manufacturer of analog chips and embedded processors, released a third-quarter revenue guidance that exceeded market expectations but failed to ignite investor enthusiasm—its stock price has risen significantly this year, and market expectations have risen accordingly. Texas Instruments' second-quarter revenue grew 23% year-on-year to $5.46 billion, better than the market expectation of $5.24 billion; earnings per share were $2.14, also exceeding market expectations. The company expects third-quarter revenue to be between $5.65 billion and $6.15 billion, with the average analyst estimate at $5.62 billion This outlook indicates that the company is becoming one of the main beneficiaries of the wave of artificial intelligence spending; at the same time, the recovery in chip demand in the traditional automotive and industrial equipment sectors is also enhancing performance. As of the time of publication, Texas Instruments fell over 3% in pre-market trading on Thursday.

"Blue Giant" IBM (IBM.US) faces challenges in transformation: Mainframe sales plummet by 42%! Full-year revenue forecast revised down to a growth of 4%-5%. IBM has lowered its full-year revenue forecast and also reduced the annual sales growth rate of its software business, which is particularly concerning for the market, mainly due to a significant decline in demand for its mainframe business. The financial report shows that IBM's revenue in the second quarter was approximately $17.2 billion, a year-on-year increase of about 1%; mainframe sales fell by 42% quarter-on-quarter. The adjusted earnings per share were $2.93. The company expects full-year revenue growth of 4% to 5% in 2026, down from the previous guidance of "over 5%"; Chief Financial Officer Jim Kavanaugh revealed that the annual revenue growth rate for the software business is expected to be in the range of 6% to 8%. CEO Arvind Krishna admitted that in the last few weeks of June, customers suddenly shifted their quarterly capital expenditures towards server, storage, and memory purchases to lock in supply-constrained AI infrastructure before anticipated price increases; the company "did not anticipate the magnitude of the capital expenditure reallocation," and several large transactions failed to complete signing as expected. As of the time of publication, IBM fell over 1% in pre-market trading on Thursday.

AI data center business becomes a new growth engine, Nokia (NOK.US) Q2 profit significantly exceeds expectations. Nokia's second-quarter profit greatly exceeded market expectations, as the Finnish telecommunications equipment manufacturer focused on developing its data center hardware business, driving sales growth. Nokia announced on Thursday that its net sales in the second quarter increased by 8% year-on-year to €4.8 billion, in line with analyst expectations; adjusted operating profit increased by 18% year-on-year to €434 million (approximately $496 million), while the average analyst expectation was €372.3 million. Data shows that, at fixed exchange rates, the sales of the network infrastructure department covering AI data center connectivity business increased by 12% year-on-year in the second quarter, reaching €2.037 billion. Among them, sales of optical network business grew by 20%, and sales of IP network business grew by 16%. Net sales to AI and cloud customers increased by 105%.

Middle East conflict ignites oil prices! Refining and trading business boosts TotalEnergies (TTE.US) Q2 net profit by 68%. French energy giant TotalEnergies stated that due to the Middle East war driving up crude oil and refined oil prices, the impact of declining profits in the natural gas business was offset, leading to a significant increase in the company's second-quarter profits. TotalEnergies stated in a statement on Thursday that its adjusted net profit in the second quarter increased by 68% year-on-year to $6.03 billion. This performance is generally in line with analyst expectations. TotalEnergies will pay a mid-quarter dividend of €0.90 per share (approximately $1.03) to shareholders, an increase of 5.9% compared to the same period last year. The company also plans to repurchase up to $1.5 billion in stock in the third quarter, consistent with the buyback scale of the previous three quarters. As of the time of publication, TotalEnergies rose nearly 3% in pre-market trading on Thursday Southwest Airlines (LUV.US) Q2 performance mixed, full-year EPS guidance exceeds expectations. The financial report shows that Southwest Airlines' Q2 revenue increased by 16.4% year-on-year to $8.43 billion, below the market expectation of $8.58 billion; adjusted earnings per share were $0.94, far exceeding the market expectation of $0.51. Looking ahead to the third quarter, Southwest Airlines expects adjusted earnings per share to be between $0.50 and $0.75, while the market expectation is $0.80. For the full year of 2026, the company expects adjusted earnings per share to be between $3.25 and $4.25, while the market expectation is $3.13. As of the time of writing, Southwest Airlines' stock fell over 3% in pre-market trading on Thursday.

American Airlines (AAL.US) Q2 performance exceeds expectations, Q3 profit guidance falls short of expectations. The financial report shows that American Airlines' Q2 revenue was $16.735 billion, higher than the market expectation of $16.707 billion; adjusted earnings per share were $0.15, above the market forecast of $0.03. The company’s fuel costs increased by over $2.2 billion in the second quarter, an 83% year-on-year increase. American Airlines expects adjusted earnings per share for the third quarter to be between -$0.70 and -$0.10, while the market forecast is $0.28. As of the time of writing, American Airlines' stock fell nearly 4% in pre-market trading on Thursday.

Countdown to SpaceX's (SPCX.US) Starship's 13th test flight! A crucial flight that impacts SpaceX's space ambitions and trillion-dollar valuation. After abandoning a launch attempt last week, SpaceX will attempt its giant Starship rocket's important test again on Thursday. This event will expose investors to the risks brought by the company's tumultuous R&D cycle and further increase the attention on this critical milestone. This Starship flight test is the 13th flight of the rocket and the first flight test since SpaceX completed the largest IPO in history in June. For the 13th test flight of Starship, the capital market is genuinely concerned not just about whether the mission will ultimately be labeled as a "success" or "partial success," but more about confirming whether the issues that have been exposed have been resolved and whether Starship is gradually approaching actual use after a series of test flights.

Important economic data and event forecasts

At 20:30 Beijing time, initial jobless claims in the U.S. for the week ending July 18.

Earnings forecasts

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

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