Preview of US Stock Market | Three major stock index futures rise together, the narrative of a soft landing of the US economy once again becomes a focus of the market.

Pre-market market trends 1. Before the market on September 19th (Thursday), the futures of the three major US stock indexes rose. As of the time of writing, Dow futures were up 1.21%, S&P 500 futures were up 1.66%, and Nasdaq futures were up 2.07%. 2. As of the time of writing, the German DAX index rose by 1.49%, the UK FTSE 100 index rose by 1.04%, the French CAC 40 index rose by 1.98%, and the European Stoxx 50 index rose by 1.81%. 3. As of the time of writing, WTI crude oil rose by 1.12% to $70.66 per barrel. Brent crude oil rose by 0.99% to $74.38 per barrel. Market News The Fed's rate cut is a major focus. The narrative of a "soft landing" for the US economy has once again become a market focus. On Wednesday, the Fed announced a rate cut as scheduled, reducing rates by 50 basis points, the first such reduction in over four years. Powell assured investors that the significant rate cut was to protect a resilient economy, and not an emergency response to recent weakness in the labor market. The outlook of Fed Chairman Powell may be a key factor in influencing the stock and bond markets for the remainder of 2024. The prospect of a "soft landing" has boosted the stock and bond markets this year, but signs of weakness in the labor market have raised concerns that Fed action may be too late. Eric Beyrich, Co-Chief Investment Officer at investment advisory firm Sound Income Strategies, said, "Currently, it seems like the market has paused to digest the surprising news. People are still wondering, 'Wow, if the Fed has cut rates by such a large amount, what signs are they seeing that we aren't, indicating the economy will get worse?'" A 50 basis point rate cut is not enough! The market is betting that the Fed will further cut rates by 70 basis points this year. After the Fed cut rates by half a point and hinted at further cuts this year, traders have increased their bets on the pace of future cuts by the Fed. The market currently expects the Fed to cut rates by an additional 70 basis points at the remaining two meetings this year, reflecting a much more aggressive stance than policymakers. Jamie Patton, Co-Head of Global Rates at TCW Group Inc., said that traders are pricing in more rate cuts than what Fed officials suggest in their dot plot, which is correct. She said, "Historically, the market has done a good job of forecasting the magnitude and pace of rate cuts ahead of time. However, in the last three cycles, the rate market severely underestimated the total amount of cuts. We believe this time will be no different, and we will see the same theme repeated in this cycle." "New Bond King" Gundlach: a 50 basis point rate cut is not enough, the Fed is somewhat behind the curve. Jeffrey Gundlach, founder of DoubleLine Capital, said that he was not surprised by the Fed's significant 50 basis point rate cut, but further cuts may be necessary as the US economy may already be contracting. Gundlach noted signs of trouble in the economy, including high credit card rates. He said, "Consumer debt levels are very high. I expect economic data in future reports to be weaker. I still think it is very likely that history will say that September 2024 was the beginning of an economic recession." The Fed's rate cut cycle has begun! The trend of a "big to small" market is becoming more apparent, with small-cap stocks gaining momentum. Some Wall Street strategists have suggested that against the backdrop of the Fed's rate cut, the performance of small and mid-cap stocks may outpace the seven major tech giants and the broader large-cap stocks. The main reason is that small and mid-cap stocks are often very sensitive to the Fed's benchmark interest rate, as they rely heavily on floating rate loans. Therefore, under the Fed's rate cut backdrop, it means that their long-term debt pressure will be significantly reduced, potentially increasing profit margins and stock valuations. With the interest rate futures market pricing in almost a 100% chance of a 100 basis point rate cut by the Fed before the end of the year, the classic rotation of small and mid-cap stocks or the trend of profit recovery in small and mid-cap stocks may be fully displayed, leading to capital shifting towards small and mid-cap stocks that benefit from the rate cut cycle and have very cheap stock prices and valuations, rather than the tech giants whose valuations are at historical highs. After the Fed's significant rate cut, market expectations for further easing are still ahead of the curve, causing US bond yields to decline. As traders shift their focus from the highly anticipated first rate cut by the Fed to the state of the labor market, US Treasury bonds have seen a slight increase in price. Yields on US Treasury bonds of various maturities have declined, with short-term bonds performing well. The yield on the two-year US Treasury bond fell by 3 basis points to 3.59%. While Fed Chair Powell described the 50 basis point rate cut on Wednesday as a "mid-cycle adjustment," market expectations for further easing at a similar pace and magnitude for the rest of the year and beyond have hardly changed. The market tends to believe that the Fed will cut rates by 25 basis points three more times before the end of the year and is expected to cut rates by 200 basis points next year. This expectation is more aggressive than the rate path shown in the latest dot plot released by the Fed, which only indicates another 50 basis point rate cut for this year. Individual Stock News The EU warns Apple Inc. (AAPL.US) to open up the iPhone and iPad operating system, or face hefty fines. EU regulators announced under the EU Digital Markets Act (DMA) that Apple Inc. must comply with new strict regulations to make its operating system fully compatible with other technologies. The EU regulators have given Apple Inc. 6 months to comply with the regulations, or face the threat of future penalties. While this statement is just a step away from formal adjustment, the EU's goal is to force Apple Inc. to redesign its services to allow competitors access to the iPhone and iPad operating systems. One of the goals of the DMA is to ensure that other developers have access to key features of the iPhone, such as Siri voice commands and payment chips. If Apple Inc. does not comply with the DMA, the EU may decide to launch a formal investigation, which could ultimately lead to fines of up to 10% of the company's global annual revenue.Huge fine.Labor negotiations have reached a deadlock, forcing thousands of Boeing Company (BA.US) employees to take temporary leave. In response to the impending strike, Boeing Company announced that it would temporarily lay off thousands of employees. Boeing Company CEO Kelly Ortberg stated in an email to employees, "We will begin temporary layoffs in the next few days, affecting a large number of executives, managers, and staff residing in the U.S." "We plan to rotate employees on a week off every 4 weeks during the strike." Kelly Ortberg also mentioned that he and other management at Boeing Company "will take corresponding pay cuts during the strike." The large-scale temporary layoffs indicate that Kelly Ortberg is preparing Boeing Company to deal with a prolonged strike. Given the anger of Boeing Company's ordinary workers, this strike is unlikely to be easily resolved. Some analysts suggest that the protracted labor dispute could cost Boeing Company billions of dollars, further exacerbating the company's financial strain and threatening its credit rating. Riding the AI wave! T-Mobile (TMUS.US) expects EBITDA to increase to $39 billion by 2027. One of the largest wireless telecommunications operators in the U.S., T-Mobile, has announced its growth targets for the next three years, expecting profits to increase with the growth in customer numbers and new technologies like artificial intelligence. T-Mobile is collaborating with OpenAI to develop a new platform called IntentCX to provide faster and more personalized customer service. By accessing consumer data, IntentCX will be able to utilize meaningful understanding and knowledge of each customer to solve problems and take proactive actions on their behalf. T-Mobile has also announced partnerships with NVIDIA Corporation, Telefonaktiebolaget LM Ericsson Sponsored ADR Class B, and Nokia Oyj Sponsored ADR to design AI-powered mobile networks, bringing more advanced features to wireless access networks. Furthermore, T-Mobile forecasts that EBITDA will increase to $39 billion by 2027; service revenue is expected to grow at a compound annual growth rate of around 5% from 2023 to 2027, reaching $76 billion. Important Economic Data and Events Preview 20:30 Beijing time: Initial jobless claims in the U.S. for the week ending September 14th 20:30 Beijing time: Philadelphia Fed Manufacturing Index for September in the U.S. 22:00 Beijing time: August Existing Home Sales Annualized Total in the U.S. Earnings Preview Friday Morning: FedEx Corporation (FDX.US)