Pre-Market Overview
1. On Tuesday, August 4th, before the U.S. market open, the three major U.S. stock index futures were all trading higher. At the time of writing, Dow futures were up 1.08%, S&P 500 futures rose 0.36%, and Nasdaq futures gained 1.16%.
2. As of writing, Germany's DAX index was up 0.70%, the UK's FTSE 100 rose 0.50%, France's CAC 40 gained 0.34%, and the Euro Stoxx 50 was up 0.82%.
3. West Texas Intermediate crude oil fell 3.71% to $77.36 per barrel, while Brent crude dropped 2.92% to $81.32 per barrel.
Market Updates
U.S. Treasury Secretary Hints at Possible Iran Deal to Reopen Strait of Hormuz. According to U.S. media reports on Tuesday, Treasury Secretary Bessent stated that the U.S. could reach an agreement with Iran as early as tomorrow to reopen the Strait of Hormuz.
Goldman Sachs Partner: Earnings Are the Core Driver, S&P 500 Could Hit New Highs This Year. Strong corporate earnings are providing the most solid support for the U.S. stock market bulls. Goldman Sachs partner John Flood believes that with market positioning becoming "cleaner," the S&P 500 is on track to reach new all-time highs this year. The core logic driving this forecast is earnings. According to Goldman Sachs data, the S&P 500's second-quarter earnings per share growth rate is tracking at a staggering 45%, far exceeding the 22% consensus estimate at the start of the quarter. Even excluding non-recurring items like the roughly $151 billion in equity investment-related "other income" from Google and Amazon, the S&P 500's earnings per share growth rate still stands at 26%. This not only accelerated from the first quarter but also represents the fastest pace since 2021. In terms of revision breadth, the number of companies within the S&P 500 with upward earnings estimate revisions continues to outpace those with downward revisions, keeping the breadth positive. Goldman Sachs views this broad-based upward trend as a crucial foundation supporting market valuations. John Flood pointed out that the full benefits of the AI super-cycle have not yet been fully realized, with the world's largest tech companies continuously increasing capital investment, thereby expanding the breadth and depth of earnings improvements.
Citadel Securities: Retail Speculation Cools, Core U.S. Stock Rally Logic Remains "Intact". Citadel Securities stated that while recent speculative trading among retail investors has notably cooled, the core drivers behind the U.S. stock market's record highs this year remain "intact," with the market gradually shifting from being flow-driven to being driven by corporate fundamentals. Scott Rubner, head of equities and equity derivatives strategy at Citadel Securities, wrote in a recent report, "The market is transitioning from a flow-driven environment back to a phase increasingly dominated by corporate earnings, company stock buybacks, and the macroeconomic backdrop." Rubner believes that after the "excessive speculation" accumulated in the market has been somewhat relieved, the fundamental picture for U.S. stocks is actually healthier. Recent corporate earnings reports have been generally strong, with most companies beating already elevated expectations, providing support for future stock market performance.
The "Sleeping Giant" Awakens: The $30 Trillion Treasury Market is Stirring, How Long Can the Stock Rally Last? The U.S. Treasury market, long considered the "sleeping giant" at the core of global finance, is showing significant changes. This roughly $30 trillion market serves as a critical foundation for the global financial system. In the coming days and weeks, investors fear that sharp fluctuations in Treasury yields could spill over into other asset classes like stocks. After a sustained rally in early July, long-term Treasury yields noticeably accelerated their upward movement in the final week of July. Some market participants believe this trend reflects investors testing the Fed's resolve to curb inflation. Historical experience shows that when Treasury yields approach current levels, financial stress often begins to spread to other markets, potentially weighing on stocks. As investors start hedging against further rate increases, the ICE BofA MOVE index, which measures expected volatility in the Treasury market, has been rising, reaching its highest level since May. Concurrently, demand for put options on the iShares 20+ Year Treasury Bond ETF has increased, pushing the put/call ratio higher.
Warsh's Communication Triggers Trust Crisis, JPMorgan Advances Fed Rate Hike Forecast to December. Fed Chair Warsh's press conference following last week's policy meeting sparked concerns about the central bank's ability to control inflation. JPMorgan Chase's economic team believes that Warsh failed to clearly articulate the future policy path, thereby undermining market confidence in the Fed's inflation-fighting credibility and prompting an early adjustment of their rate forecast. Michael Feroli, JPMorgan's chief U.S. economist, and his team stated that with the Fed's credibility damaged, the urgency for policy tightening is rising. They now expect the next rate hike to occur in December this year, advancing their previous forecast for the second half of 2027. However, the team also acknowledged that the Fed could act as soon as its September meeting.
Risk of Attacks Escalates, Shipping Traffic Through the Strait of Hormuz Plummets. According to monitoring by shipping data firms Kpler and Vortexa, visible traffic through the Strait of Hormuz has dwindled to a trickle. On Monday, only three oil tankers transited the strait, a sharp decline from seven on Sunday. To avoid potential strikes, an increasing number of tankers are turning off their transponders when passing through key waters, effectively sailing "dark." Meanwhile, U.S. media reported on Monday, citing Iranian and U.S. officials, that Iran and Oman are nearing an agreement on navigation through the Strait of Hormuz. According to the terms being discussed, ships entering the Persian Gulf would use a lane near the Iranian coast controlled by Iran, while departing vessels would take a route close to Oman. However, Iranian officials stated that even if an agreement with Oman is reached, the Strait of Hormuz would remain closed unless the U.S. lifts its blockade of Iranian ports and reinstates the previously agreed 14-point memorandum of understanding between Iran and the U.S.
U.S. Stockpiles Record Copper Imports, Betting on Trump's Next Tariff Move. The U.S. is experiencing its largest copper import wave in at least 12 years, as traders bet on President Trump's upcoming tariff policy on refined copper, rushing large quantities of the metal into the country. Shipping data shows that over 200,000 tonnes of copper entered the U.S. in July, the highest monthly total since IHS Markit began tracking in 2014. Meanwhile, U.S. copper inventories continue to climb. As of last Friday, combined inventories on the COMEX and London Metal Exchange exceeded 740,000 tonnes, with LME data also showing approximately 110,000 tonnes of copper in private storage at U.S. ports. This massive influx of copper is reshaping global supply dynamics. With prices in the U.S. market significantly higher than in London, traders are diverting copper from other regions to the U.S. to capture the arbitrage opportunity created by tariff expectations.
Stock Highlights
Chip and optical communication stocks saw broad-based gains in pre-market trading on Tuesday. In the chip sector, Western Digital Corp (WDC.US) rose nearly 7%, Seagate Technology Holdings PLC (STX.US) gained nearly 6%, SanDisk Corp (SNDK.US), Intel Corp (INTC.US), and Advanced Micro Devices Inc (AMD.US) all rose over 5%, while SK Hynix Inc (SKHY.US) and Micron Technology Inc (MU.US) were up more than 4%. Qualcomm Inc (QCOM.US) and Broadcom Inc (AVGO.US) were up nearly 3%. In the optical communication space, Coherent Corp (COHR.US) surged over 17%, Lumentum Holdings Inc (LITE.US) rose over 14%, Corning Inc (GLW.US) gained over 9%, Marvell Technology Inc (MRVL.US) and Astera Labs Inc (ALAB.US) climbed nearly 8%, Credo Technology Group Holding Ltd (CRDO.US) was up over 7%, and Nokia Corp (NOK.US) rose over 5%.
After a Record-Breaking IPO Decline, Can Starship, Starlink, and AI Computing Power Salvage SpaceX's Trillion-Dollar Valuation? Following a brutal sell-off that saw its stock price halve from its peak post-IPO, wiping out over $500 billion in market value, Elon Musk's SpaceX (SPCX.US) is set to report its first earnings results since going public after the market close on Tuesday. This report will be not only a test of its cash-intensive business model but also a critical battle for market confidence, with a massive wave of lock-up expirations looming and short interest rising sharply. For this pivotal earnings release, the market will focus on Starlink subscriber numbers, satellite internet revenue, rocket launch frequency, government contracts, and spending on the Starship program. Given the significant volatility in SpaceX's stock since its listing, this first earnings report will help investors assess whether the company's business model, profitability, and cash flow can justify its high valuation.
The U.S. Military's Largest AI Supplier Posts Stellar Results! Palantir Technologies Inc (PLTR.US) Sharply Raises Full-Year Guidance, CEO Calls Commercial Demand "Unusual". Palantir reported Q2 revenue of $1.94 billion, up 94% year-over-year and exceeding expectations by $130 million. Adjusted earnings per share came in at $0.41, beating estimates by $0.06. The company noted that its U.S. commercial sales in the second quarter were "stunning," surging 149% year-over-year to $764 million, well above the analyst average estimate of $716.4 million. Palantir now expects 2026 sales to reach $8.16 billion, higher than the analyst average estimate of ~$7.7 billion. It also forecasts full-year adjusted operating profit between $4.89 billion and $4.91 billion, above the previous guidance range upper limit of $4.45 billion. The stronger outlook helps alleviate investor concerns that AI developers like Anthropic selling their own software and non-U.S. governments increasingly favoring domestic tech partners could harm Palantir's business. As of writing, Palantir shares were up over 16% in pre-market trading on Tuesday.
AI Boom Spills Over to the Power Chain! ON Semiconductor Corp (ON.US) Q2 Results and Q3 Outlook Both Beat Estimates. Q2 revenue was $1.6 billion, up 9.2% year-over-year and slightly above the analyst average estimate of ~$1.59 billion. Adjusted earnings per share were $0.74, up about 40% year-over-year and above the market consensus of $0.71. The company guided Q3 revenue between $1.65 billion and $1.75 billion, with the midpoint exceeding the analyst average estimate of $1.67 billion. It expects Q3 adjusted earnings per share between $0.81 and $0.93, with the midpoint also significantly above the $0.83 analyst consensus. This strong outlook reflects surging demand for its power management chips used in AI data centers. The CEO stated, "AI data center-related business remains our fastest-growing segment. We currently expect this business's 2026 revenue to at least double, demonstrating the strength of our intelligent power portfolio and the expanding adoption of ON Semiconductor across the entire power tree architecture by our customers." As of writing, ON Semiconductor shares were up over 8% in pre-market trading on Tuesday.
Leveraging Weak Yen and Hybrid Advantage! Toyota Motor Corp (TM.US) Announces Trillion-Yen Buyback, Sharply Raises FY2027 Earnings Forecast. Toyota reported Q1 FY2027 sales of ¥13.5 trillion, up 10.4% year-over-year, with net profit attributable to shareholders of ¥1.48 trillion. The company benefited from continued strong sales of gasoline-electric hybrid vehicles in the U.S. This, combined with the weaker yen in the first half of the fiscal year, provided a buffer against rising raw material costs and supply chain disruptions caused by the Middle East conflict. Concurrently, it announced a ¥1 trillion ($63 billion) share buyback program and raised its profit forecast. Toyota raised its operating profit forecast for the fiscal year ending next March by over 10% to ¥3.4 trillion, compared to the analyst average estimate of ¥3.9 trillion.
World Cup Advertising Provides a Tailwind, Snap Inc (SNAP.US) Q2 Revenue Beats Estimates. In the second quarter ended June 30, Snap reported revenue of $1.6 billion, up 19% year-over-year and significantly above the analyst average estimate of $1.54 billion. Advertising revenue, which constitutes the bulk of total revenue, grew 9% year-over-year to $1.28 billion. Net loss narrowed sharply from $262.6 million a year ago to $164 million. Adjusted profit was $250 million, well above the market consensus of $192 million. The strong performance in ad revenue this quarter was largely driven by marketing spending related to the FIFA World Cup and a notable improvement in advertising spending from large North American clients. As of writing, Snap shares were up nearly 7% in pre-market trading on Tuesday.
Pfizer Inc (PFE.US) Q2 Results Top Estimates, Raises Full-Year Revenue Guidance. Pfizer reported Q2 revenue of $15.03 billion, beating the market consensus of $14.41 billion. Adjusted earnings per share were $0.77, above the market consensus of $0.68. The company now expects full-year revenue between $60.5 billion and $62.5 billion, up from the previous guidance of $59.5 billion to $62.5 billion, though the midpoint is slightly below the market estimate of $61.8 billion. It maintained its full-year adjusted earnings per share guidance of $2.80 to $3.00, compared to the analyst estimate of $2.94. Pfizer also separately announced it is expanding two cost-cutting programs, projecting total net savings to increase to $9.7 billion by 2029.
Key Economic Data and Events Schedule
22:00 Beijing Time: U.S. June JOLTS Job Openings
Earnings Reports Scheduled
After the bell Wednesday: SpaceX (SPCX.US), Advanced Micro Devices Inc (AMD.US), Arista Networks Inc (ANET.US), Astera Labs Inc (ALAB.US)
Before the bell Wednesday: Honda Motor Co Ltd (HMC.US), Novo Nordisk A/S (NVO.US), Walt Disney Co (DIS.US), Uber Technologies Inc (UBER.US), Eli Lilly and Co (LLY.US), CVS Health Corp (CVS.US)
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