Pre-market: Nasdaq futures fell 0.2%, the Fed will announce an interest rate decision
Global stock markets struggled to move higher on Wednesday, with the U.S. stock market falling slightly and selling pressure on chip stocks easing as investors awaited earnings reports from two of the world's largest artificial intelligence investors. At the same time, U.S. Treasury bonds fell, and the market believed that there was room for interest rate hikes in the Federal Reserve's interest rate decision. As of press time, Dow futures fell 0.7%, S&P 500 futures fell 0.1%, and Nasdaq futures fell 0.2%. The chip stock ETF, which had been closely watched by the market, rebounded. It fell before the market opened, as investor enthusiasm for chip companies continued to cool. MSCI's global all-country stock price index fell 0.11%, hovering near a one-month low. Chip stocks become the center of the market storm In Europe, the pan-European Stoxx 600 index rose for a time and then fell 0.2%. The market received a large number of corporate financial reports that day. The performance of the two giants in the European luxury goods industry has diverged: The group's share price rose after its Gucci sales exceeded market expectations; It was hit by weak growth in Asian markets. As AI trading momentum wanes, investors are eyeing Meta Platforms and financial report. The market has begun to question whether large-scale investments in AI infrastructure, much of which comes from debt financing, can generate sufficient returns. The market demands “more than just growth” At the same time, chipmakers have also been punished, and investors worry that the industry's previously high profit margins will not be sustainable. As market expectations have been pushed up, even though South Korean memory chip giant SK Hynix's quarterly profit increased sixfold, it still failed to meet investor expectations, causing its stock price to plummet by nearly 10%, continuing its recent decline. Over the past month, the company's market value has evaporated by more than $700 billion. "The sell-off in chip stocks seems excessive, but as long as the market begins to question the sustainability of the AI cycle, volatility is inevitable." Jake Seltz, portfolio manager of the Empiric LT Equity team at Allspring Global Investments, said, "Market expectations are already so high that just delivering good results is no longer necessarily enough." South Korean stock market becomes AI sentiment barometer The Korea Composite Index (KOSPI) has become a representative indicator of violent fluctuations in AI sentiment. The index fell nearly 6% on Wednesday. The day before, South Korea's stock market plunged more than 10% to a three-month low. South Korean Finance Minister Koo Yun-cheol apologized on Wednesday, saying that insufficient consideration was not given when launching single stock leveraged ETFs. The approval of these leveraged ETFs has been criticized for amplifying volatility in South Korea's stock market. Technology giants face financial reporting exam It became the only "Big Seven" stock to perform relatively stably during the turmoil in AI trading. "I hope Meta and Microsoft can confirm that the industry-wide capital spending boom is still justified and re-boost the market's confidence in the semiconductor industry," said Fares Hendi, fund manager at Société de Gestion Prévoir in Paris. Conor Cooper, a macro market strategist at Bloomberg, said Microsoft and Meta will release earnings reports after the market close, followed by Samsung Electronics’ earnings report on Thursday. The results of these companies are likely to disappoint the market because investor expectations have been very high. But even if earnings miss expectations, recent market performance suggests the situation is unlikely to turn into a broader market sell-off. He believes that stronger market resilience may restrict the AI sell-off from spreading to the entire market. Middle East conflict escalates, fuel prices rise The latest escalation of conflict in the Middle East has had limited impact on stock and bond markets. Days of relative calm came to an abrupt end when Iran launched a nighttime attack on U.S. forces, followed by the U.S. and Saudi Arabia attacking Iranian-backed militia groups in Iraq. Edward Acton, interest rate strategist at GMO, said: "This rapid and recurring situation makes it increasingly difficult for the market to distinguish real signals from noise."
Group analysts said: "These developments weaken the prospects for a rapid de-escalation in the Persian Gulf region." Analysts noted: "With the increased risk of attacks on Saudi oil infrastructure, the probability of prolonged energy supply disruptions is rising." Brent crude oil rose 4.3% to $87.65 a barrel, ending a three-day decline of 16%. "Oil price volatility itself, not just the level of oil prices, could create inflationary pressures as some commodity prices rise as oil prices rise but then are reluctant to fall back," the equity strategists said. U.S. Treasury yields continue to be under pressure as the risk of inflation rises driven by oil prices. The benchmark 10-year U.S. Treasury bond yield rose 1.04 basis points to 4.6103%, on track to end its three-day losing streak. The 30-year U.S. Treasury yield is currently 5.0948%, and has remained above 5% for 17 consecutive trading days. Euro zone government bond yields rose in early trade. Germany's 10-year government bond yield rose 1.6 basis points to 3.122%. In early European trading, New York gold futures rose 0.2% to $4,045.80. Group analyst Soojin Kim said: "Although gold prices have fallen by nearly 25% since the conflict began, gold is still finding support around $4,000 an ounce due to persistent bargain hunting." Countdown to Fed decision Meanwhile, markets are awaiting the Federal Reserve's interest rate decision later in the day. The Fed is widely expected to keep interest rates unchanged this month and is expected to raise interest rates in September. However, the re-escalation of the conflict between the United States and Iran may also become a reason for Fed officials to raise interest rates ahead of schedule. The market currently believes that the probability of the Federal Reserve raising interest rates is about 30%. But traders expect at least one more rate hike before the end of the year. "Our basic judgment remains that the Fed will keep interest rates unchanged in July and throughout the end of 2026." Seema Shah, chief global strategist at Principal Asset Management, said. She noted that recent improvements in inflation data and controlled inflation expectations have given policymakers room to wait for more clear evidence before acting. "Hawks stand still" becomes a key scenario At present, many Federal Reserve officials have publicly expressed concerns about inflation risks. David Waddell, chief investment strategist at Coastal Bridge Advisors, said: "While the market generally believes that this Fed meeting will not bring major changes, rising financing costs remain a key risk facing the stock market this year." He pointed out that many large technology companies are increasingly relying on public market financing to support expansion, so the high interest rate environment may bring pressure. Erik Liem, an analyst at Commerzbank, said that while the market is generally (but not unanimously) expected that the Fed will keep interest rates unchanged, the key question is "how the market will fill the gap in the lack of policy guidance at the press conference." The market intelligence team said that if the Federal Reserve sends a dovish signal and keeps interest rates unchanged at the current level, this will be the "best outcome" for the stock market. The report shows that the probability that the Fed will keep interest rates unchanged while releasing a dovish signal on the inflation outlook is about 28%. If this scenario plays out, the S&P 500 could rise between 0.5% and 1%. JPMorgan Chase believes that the most likely base case (50% probability) is that the hawks stand still. That is, the Federal Reserve kept interest rates unchanged, but emphasized that it still needs to be vigilant about inflation risks. "It's very rare to see market sentiment so divided just hours before the Fed decision," said Amélie Derambure, senior multi-asset portfolio manager at Amundi. She pointed out: "This means that some investors will inevitably be affected. If raising interest rates means the beginning of a new tightening cycle, it may have serious consequences for the stock market." Biogen rose 0.7%. The biotech company topped Wall Street consensus estimates and raised its full-year adjusted earnings per share guidance.
AI infrastructure stock Vertiv fell 13%, reporting mixed results for the second quarter. While both earnings and revenue beat analysts' expectations, organic revenue grew 17.8% year over year, significantly lower than the 23.6% consensus estimate given by FactSet. Generator manufacturer Generac's stock price rose 5.5% after its second-quarter profit was better than expected. Excluding special items, earnings per share were $2.91, topping the FactSet forecast of $2.01. The company reiterated that its full-year revenue growth guidance remains unchanged. It fell more than 3%, with quarterly revenue missing analysts’ expectations. Total revenue in the fourth quarter of fiscal 2026 was US$21.2 billion, slightly lower than the US$21.38 billion expected by London Stock Exchange Group (LSEG); net profit fell to US$3.04 billion from US$3.62 billion in the same period last year. Healthcare shares soared 12%. The medical solutions company reported second-quarter adjusted earnings of $1.13 per share, beating the FactSet consensus estimate of $1.04, while confirming that its full-year 2026 profit guidance remains unchanged. Deutsche Bank rose more than 2% on strong second-quarter results. Net profit after tax amounted to €1.9 billion, a record high for the same period. Chief Financial Officer Raja Akron said that all business segments of the bank performed well this quarter. up nearly 1%. The global aerospace and defense company's revenue and earnings per share both exceeded Wall Street consensus expectations, and its order backlog reached $136.5 billion. up 6%. Automakers' adjusted profits in the second quarter exceeded expectations and they raised their 2026 profit outlook; however, main auto business revenue was slightly lower than analysts' expectations compiled by LSE. Real estate platform CoStar plunged 15%, with second-quarter revenue missing analysts' expectations according to FactSet. The company also gave a revenue forecast range of US$935 million-945 million for this quarter, which was lower than the market consensus of US$967.5 million. Clothing maker Rocky Brands jumped 16%. Earnings per share excluding special items in the second quarter more than tripled year-on-year. The Ohio-based company said that many of its brands have achieved double-digit growth, and tariff rebates have also boosted performance. Shares of paint and glass manufacturer PPG Industries fell about 1%. Second-quarter earnings per share and adjusted earnings before interest, taxes, depreciation, and amortization fell short of Wall Street analysts' expectations; however, the company's full-year earnings per share guidance remained unchanged. Wafer manufacturing equipment company (KLA Corp) shares fell 7% after its latest guidance missed the market. The company expects adjusted earnings per share for the next quarter to be $1.16, with a range of ±$0.1; the LSE expected $1.14. Revenue is expected to be approximately US$4 billion, with a floating range of ±US$200 million. The market had previously expected US$3.92 billion. Technology rose 6%, with its latest guidance sharply beating analysts' forecasts. LSE data shows that Seagate expects adjusted earnings per share of about US$7.30 in the next fiscal quarter, while analysts had expected only US$5.80; revenue is expected to be about US$4.1 billion, higher than market expectations of US$3.75 billion. Inspired by this, Shares rose 4% in sync. Supply chain software service provider Manhattan Associates rose 11%. Its second-quarter profit and revenue exceeded analysts' expectations, and it also raised its full-year profit and revenue targets. ) fell 2%, with full-year guidance for fiscal 2026 failing to meet market expectations. The company maintained adjusted nominal dollar earnings per share growth of around 15%, basically matching the FactSet consensus of 14.7%. The company announced earlier in the day that it would lay off about 2,600 people, a reduction of about 7%. Semiconductor test equipment manufacturers Teradyne ) rose 9%. FactSet data shows that its second-quarter adjusted earnings and revenue, as well as its third-quarter revenue and profit forecasts, were all higher than market expectations.
Semiconductor design company NXP Semiconductors fell 1.7%. Non-GAAP gross profit margin in the second quarter was 58%, in line with market expectations. The company expects adjusted earnings per share in the third quarter to be in the range of $3.89 to $4.32, compared with the LSE consensus of $3.98. Skyworks Solutions fell 9%. The adjusted gross profit margin in the third quarter was 44.9%, slightly lower than market expectations of 45%; the adjusted earnings per share in the fourth quarter was expected to be US$1.27, slightly lower than the LSE expectation of US$1.28. Open a futures account on Sina's cooperative platform, safe, fast and guaranteed
Group analysts said: "These developments weaken the prospects for a rapid de-escalation in the Persian Gulf region." Analysts noted: "With the increased risk of attacks on Saudi oil infrastructure, the probability of prolonged energy supply disruptions is rising." Brent crude oil rose 4.3% to $87.65 a barrel, ending a three-day decline of 16%. "Oil price volatility itself, not just the level of oil prices, could create inflationary pressures as some commodity prices rise as oil prices rise but then are reluctant to fall back," the equity strategists said. U.S. Treasury yields continue to be under pressure as the risk of inflation rises driven by oil prices. The benchmark 10-year U.S. Treasury bond yield rose 1.04 basis points to 4.6103%, on track to end its three-day losing streak. The 30-year U.S. Treasury yield is currently 5.0948%, and has remained above 5% for 17 consecutive trading days. Euro zone government bond yields rose in early trade. Germany's 10-year government bond yield rose 1.6 basis points to 3.122%. In early European trading, New York gold futures rose 0.2% to $4,045.80. Group analyst Soojin Kim said: "Although gold prices have fallen by nearly 25% since the conflict began, gold is still finding support around $4,000 an ounce due to persistent bargain hunting." Countdown to Fed decision Meanwhile, markets are awaiting the Federal Reserve's interest rate decision later in the day. The Fed is widely expected to keep interest rates unchanged this month and is expected to raise interest rates in September. However, the re-escalation of the conflict between the United States and Iran may also become a reason for Fed officials to raise interest rates ahead of schedule. The market currently believes that the probability of the Federal Reserve raising interest rates is about 30%. But traders expect at least one more rate hike before the end of the year. "Our basic judgment remains that the Fed will keep interest rates unchanged in July and throughout the end of 2026." Seema Shah, chief global strategist at Principal Asset Management, said. She noted that recent improvements in inflation data and controlled inflation expectations have given policymakers room to wait for more clear evidence before acting. "Hawks stand still" becomes a key scenario At present, many Federal Reserve officials have publicly expressed concerns about inflation risks. David Waddell, chief investment strategist at Coastal Bridge Advisors, said: "While the market generally believes that this Fed meeting will not bring major changes, rising financing costs remain a key risk facing the stock market this year." He pointed out that many large technology companies are increasingly relying on public market financing to support expansion, so the high interest rate environment may bring pressure. Erik Liem, an analyst at Commerzbank, said that while the market is generally (but not unanimously) expected that the Fed will keep interest rates unchanged, the key question is "how the market will fill the gap in the lack of policy guidance at the press conference." The market intelligence team said that if the Federal Reserve sends a dovish signal and keeps interest rates unchanged at the current level, this will be the "best outcome" for the stock market. The report shows that the probability that the Fed will keep interest rates unchanged while releasing a dovish signal on the inflation outlook is about 28%. If this scenario plays out, the S&P 500 could rise between 0.5% and 1%. JPMorgan Chase believes that the most likely base case (50% probability) is that the hawks stand still. That is, the Federal Reserve kept interest rates unchanged, but emphasized that it still needs to be vigilant about inflation risks. "It's very rare to see market sentiment so divided just hours before the Fed decision," said Amélie Derambure, senior multi-asset portfolio manager at Amundi. She pointed out: "This means that some investors will inevitably be affected. If raising interest rates means the beginning of a new tightening cycle, it may have serious consequences for the stock market." Biogen rose 0.7%. The biotech company topped Wall Street consensus estimates and raised its full-year adjusted earnings per share guidance.
AI infrastructure stock Vertiv fell 13%, reporting mixed results for the second quarter. While both earnings and revenue beat analysts' expectations, organic revenue grew 17.8% year over year, significantly lower than the 23.6% consensus estimate given by FactSet. Generator manufacturer Generac's stock price rose 5.5% after its second-quarter profit was better than expected. Excluding special items, earnings per share were $2.91, topping the FactSet forecast of $2.01. The company reiterated that its full-year revenue growth guidance remains unchanged. It fell more than 3%, with quarterly revenue missing analysts’ expectations. Total revenue in the fourth quarter of fiscal 2026 was US$21.2 billion, slightly lower than the US$21.38 billion expected by London Stock Exchange Group (LSEG); net profit fell to US$3.04 billion from US$3.62 billion in the same period last year. Healthcare shares soared 12%. The medical solutions company reported second-quarter adjusted earnings of $1.13 per share, beating the FactSet consensus estimate of $1.04, while confirming that its full-year 2026 profit guidance remains unchanged. Deutsche Bank rose more than 2% on strong second-quarter results. Net profit after tax amounted to €1.9 billion, a record high for the same period. Chief Financial Officer Raja Akron said that all business segments of the bank performed well this quarter. up nearly 1%. The global aerospace and defense company's revenue and earnings per share both exceeded Wall Street consensus expectations, and its order backlog reached $136.5 billion. up 6%. Automakers' adjusted profits in the second quarter exceeded expectations and they raised their 2026 profit outlook; however, main auto business revenue was slightly lower than analysts' expectations compiled by LSE. Real estate platform CoStar plunged 15%, with second-quarter revenue missing analysts' expectations according to FactSet. The company also gave a revenue forecast range of US$935 million-945 million for this quarter, which was lower than the market consensus of US$967.5 million. Clothing maker Rocky Brands jumped 16%. Earnings per share excluding special items in the second quarter more than tripled year-on-year. The Ohio-based company said that many of its brands have achieved double-digit growth, and tariff rebates have also boosted performance. Shares of paint and glass manufacturer PPG Industries fell about 1%. Second-quarter earnings per share and adjusted earnings before interest, taxes, depreciation, and amortization fell short of Wall Street analysts' expectations; however, the company's full-year earnings per share guidance remained unchanged. Wafer manufacturing equipment company (KLA Corp) shares fell 7% after its latest guidance missed the market. The company expects adjusted earnings per share for the next quarter to be $1.16, with a range of ±$0.1; the LSE expected $1.14. Revenue is expected to be approximately US$4 billion, with a floating range of ±US$200 million. The market had previously expected US$3.92 billion. Technology rose 6%, with its latest guidance sharply beating analysts' forecasts. LSE data shows that Seagate expects adjusted earnings per share of about US$7.30 in the next fiscal quarter, while analysts had expected only US$5.80; revenue is expected to be about US$4.1 billion, higher than market expectations of US$3.75 billion. Inspired by this, Shares rose 4% in sync. Supply chain software service provider Manhattan Associates rose 11%. Its second-quarter profit and revenue exceeded analysts' expectations, and it also raised its full-year profit and revenue targets. ) fell 2%, with full-year guidance for fiscal 2026 failing to meet market expectations. The company maintained adjusted nominal dollar earnings per share growth of around 15%, basically matching the FactSet consensus of 14.7%. The company announced earlier in the day that it would lay off about 2,600 people, a reduction of about 7%. Semiconductor test equipment manufacturers Teradyne ) rose 9%. FactSet data shows that its second-quarter adjusted earnings and revenue, as well as its third-quarter revenue and profit forecasts, were all higher than market expectations.
Semiconductor design company NXP Semiconductors fell 1.7%. Non-GAAP gross profit margin in the second quarter was 58%, in line with market expectations. The company expects adjusted earnings per share in the third quarter to be in the range of $3.89 to $4.32, compared with the LSE consensus of $3.98. Skyworks Solutions fell 9%. The adjusted gross profit margin in the third quarter was 44.9%, slightly lower than market expectations of 45%; the adjusted earnings per share in the fourth quarter was expected to be US$1.27, slightly lower than the LSE expectation of US$1.28. Open a futures account on Sina's cooperative platform, safe, fast and guaranteed