Preview of US Stock Market | The three major stock index futures are mixed, the market is waiting for the US Treasury Department to issue debt plans and ADP data, Alphabet (GOOGL.US) will release its financial report after market close.

1. Before the opening of the US stock market on Wednesday, the futures of the three major US stock indexes showed mixed changes. As of the time of writing, the Dow Jones Industrial Average futures were up 0.25%, the S&P 500 index futures were up 0.19%, and the Nasdaq futures were down 0.11%. 2. As of the time of writing, the German DAX index fell 0.23%, the UK FTSE 100 index rose 1.21%, the French CAC 40 index rose 0.95%, and the Euro Stoxx 50 index rose 0.24%. 3. As of the time of writing, WTI crude oil rose 0.44% to $63.49 per barrel. Brent crude oil rose 0.31% to $67.54 per barrel. Market News The steepening of the yield curve approaches a four-year high, with the issuance path of US bonds becoming a market focus. The key segment of the US bond yield curve is approaching its steepest level in four years, with the 10-year yield rising due to uncertainty in issuance, while the 2-year yield remains relatively stable due to Federal Reserve policy expectations, resulting in a "steepening bear market." The market will closely monitor tonight's US Treasury quarterly refunding statement to see if it suggests adjustments to the size of long-term Treasury auctions. If long-term supply pressures persist, they may push up government financing costs and force more reliance on short-term debt, exacerbating fiscal and interest rate risks. "The AI Replacement Panic" is intensifying! Global software stocks continue to decline, JP Morgan bluntly states: the industry has reached a "guilty until proven innocent" state. A market panic ignited by advancements in artificial intelligence (AI) technology is spreading globally, with the software sector bearing the brunt, and as of Wednesday, this decline shows no signs of easing. JPMorgan Chase & Co. stated that investor pessimism towards this sector continues to grow. JPMorgan analyst Toby Ogg stated, "The current environment for the software sector is not only one of 'presumed guilt,' but has escalated to a 'guilty until proven innocent' situation." Ogg found in discussions with over 50 investors in Europe and the US over the past 12 to 18 months, these investors have significantly reduced their holdings of software stocks. He pointed out in a client report that even after this round of correction, the market's willingness to bottom-fish software stocks remains generally low. The global software stock panic-driven sell-off spreads! Huang Renxun refutes the idea of AI replacing software, calling it "illogical." After global software stocks experienced a sharp sell-off on Tuesday, Huang Renxun, CEO of NVIDIA Corporation (NVDA.US), refuted concerns that artificial intelligence would replace software and related tools, calling this idea "illogical." This sell-off was partly due to the ChatSiasun Robot & Automation update released last week by AI developer Anthropic, intensifying market fears of disruption in the AI-driven data and professional services industry. The sell-off continued to expand on Wednesday, affecting software stocks in India, Japan, and China. Speaking at an artificial intelligence conference hosted by Cisco Systems, Inc. in San Francisco, Huang Renxun stated that the fear that AI would diminish the importance of software companies is misleading. He believes that AI will continue to rely on existing software rather than rebuilding basic tools from scratch. UBS Group AG CEO's latest view: Political turmoil at GEO Group Inc may last for ten years, tech stock valuations still need adjustment. Sergio Ermotti, CEO of UBS Group AG, stated that global political turmoil is driving clients to adjust their investment portfolios, benefiting UBS Group AG's business, and he expects this trend to continue in the coming years. Ermotti stated in an interview, "Political and macroeconomic uncertainties at GEO Group Inc are causing market volatility. I believe that for the next decade or so, we will all have to face this reality." He pointed out that this situation is prompting clients to adjust their geographic allocations, reducing their allocation to US assets in the future. "I'm not suggesting a withdrawal, reduction, or sale of US assets, but rather using idle liquidity to diversify investments." In response to the recent global sell-off of software and tech stocks, the CEO responded that the valuations of these sectors still need to undergo "a certain adjustment." FSB warns of risks in "basis trading": $3 trillion leveraged financing could become the "tipping point" for a bond market crisis. The Financial Stability Board (FSB), the highest-level financial stability regulatory body globally, urged financial policy makers in various governments to more deeply and accurately examine the huge scale of leveraged bond bets, including those represented by basis trading, favored by hedge funds and other large institutional investors. The FSB called for stronger regulation of the specific risks taken on by market participants in repurchase agreements secured by government bonds. In a research report released on Wednesday, the FSB identified and outlined several "vulnerability indicators" that regulatory authorities can track to enhance monitoring capabilities. UBS warns: If the Fed significantly shrinks its balance sheet, it may be forced to intervene more frequently to "put out fires." Kevin Warsh, former Federal Reserve governor and once nominated by Trump to lead the Fed, has been publicly calling for a significant reduction in the Fed's balance sheet. However, UBS Securities American company analysis indicates that achieving this goal would force the Fed to take on a more "interventionist" role in its daily monetary market operations. For years, US policymakers have adopted a "plentiful reserve" framework aimed at ensuring the banking system has ample liquidity, allowing Financial Institutions, Inc. to meet regulatory requirements and conduct payment settlements without having to borrow from the Fed. For the Fed, this means holding a large number of Treasury assets. Returning to an environment of scarce reserves and a significantly reduced Fed balance sheet could result in bank overdrafts and increased overnight market funding needs, weakening the Fed's control over short-term interest rate targets. Stock News Earnings Outlook | From burning cash to cashing in, can Alphabet (GOOGL.US) AI investments open up profit space by 2026? Alphabet Inc. Class C parent company Alphabet will announce its fourth-quarter results for the 2025 fiscal year after the closing of the US stock market on Wednesday. The market expects its Q4 revenue to reach $111.45 billion, a 15.53% year-over-year growth; expected earnings per share are $2.64, a 23% year-over-year growth. Investors should focus on three key indicators for the upcoming report. First, investors should closely monitor Alphabet Inc. Class C's cloud order backlog and profit margin trends. It is expected that by the third quarter of 2025, Alphabet Inc. Class C's cloud order backlog will reach around $155 billion, and any updates on conversion rates or 2026 performance guidance could confirm its prospects for years of growth. Eli Lilly (LLY.US) expects a 27% increase in sales to $83 billion in 2026. Lilly Company released optimistic full-year sales guidance on Wednesday, expecting sales to reach $80 billion to $83 billion in 2026, a potential increase of up to 27%, well above the Wall Street average estimate of $77.7 billion; adjusted earnings per share guidance is $33.50 to $35.00, also above analyst expectations of $33.08. Lilly's fourth-quarter performance was also eye-catching: total sales of $19.3 billion (above the expected $18 billion), earnings per share of $7.54 (above the expected $6.73); with the weight loss drug Zepbound generating sales of $4.3 billion and the diabetes drug Mounjaro generating sales of $7.4 billion, both significantly exceeding expectations. Mounjaro performed strongly in markets outside the US, contributing $3.3 billion in revenue. Uber Technologies, Inc. (UBER.US) exceeds Q4 booking estimates by 22%, but weak profit outlook drags down stock price. Uber Technologies, Inc. released weak profit forecasts and announced management changes on Wednesday, leading to a 6% pre-market drop. The company expects adjusted earnings per share for the current quarter to be $0.65 to $0.72, lower than the average analyst estimate of $0.77 per share; the midpoint of the adjusted EBITDA guidance is also below expectations. However, booking estimates of $52 billion to $53.5 billion exceed market expectations, with a 22% year-over-year increase to $54.1 billion in the fourth quarter, also surpassing expectations. The company appointed Balaji Krishnamurthy as the new CFO, replacing Prashanth Mahendra-Rajah, who is stepping down after less than three years; Krishnamurthy is known for his strong support of the company's autonomous driving strategy, and this appointment is seen as a signal of Uber's increased focus on the self-driving car business. As of the time of writing, Uber Technologies, Inc. is down over 5% pre-market. AMD (AMD.US) Q1 outlook becomes "Achilles' heel"? Data center surges 40%, concerns in the market. As competitors to NVIDIA Corporation in the artificial intelligence processor market, AMD's performance forecast for the fourth quarter disappointed the market, indicating that its progress in AI fields did not meet the optimistic expectations of some investors. AMD's fourth quarter sales grew by 34% to $10.3 billion, exceeding the average expectation of $9.7 billion. Adjusted earnings per share were $1.53, higher than the average analyst estimate of $1.32. The company stated on Tuesday that first-quarter sales are expected to be around $9.8 billion, plus or minus $300 million. Analysts had previously estimated sales to be around $9.39 billion, but some forecasts exceeded $10 billion. A mixed message is that AMD has started selling an old model of chip to China. Demand for AI boosts performance, Lumentum (LITE.US), a leader in optical communications, exceeds Q2 earnings and Q3 guidance. Lumentum achieved revenue of $6.65 billion in the second quarter, a significant 65% increase year-over-year, surpassing the average analyst estimate of $6.52 billion. GAAP earnings per share were $0.89, significantly higher than the average analyst estimate of $0.49; adjusted earnings per share were $1.67, also significantly higher than the average analyst estimate of $1.41. For the third quarter of the 2026 fiscal year, Lumentum expects adjusted earnings per share to be between $2.15 and $2.35, significantly higher than the average analyst estimate of $1.59. The company forecasts third-quarter revenue to be between $7.8 billion and $8.3 billion, with the mid-point of the forecast range at $8.05 billion, also significantly higher than the average analyst estimate of $7.07 billion. Electronic Arts Inc. (EA.US) Q3 performance is mixed: Revenue and earnings fall short of expectations, strong pre-orders for Battlefield 6 drive year-end growth. Electronic Arts Inc. reported weaker-than-expected third-quarter performance, with revenue and earnings falling short of expectations, but a record net pre-order volume driven by the launch of Battlefield 6 alleviated downward pressure. Total revenue increased by less than 1% to $19.01 billion, lower than the previously estimated $20.1 billion. Increased spending in research and development, marketing, and general administrative expenses during the reporting period led to net profit of $88 million ($0.35 per share), lower than $293 million ($1.11 per share) a year earlier and lower than expectations. However, the third-quarter pre-order volume exceeded expectations, mainly due to strong sales of its new release Battlefield, as well as the company's significant investment in its best-selling shooting game series beginning to pay off. Emerson Electric Co. (EMR.US) beats Q1 profit expectations, raises full-year profit guidance. Industrial automation company Emerson Electric Co. beat profit expectations in the first quarter, with revenue meeting Wall Street's forecasts. Adjusted earnings per share for the quarter ended December 31 were $1.46, above the consensus estimate of $1.41. Revenue was $4.35 billion, a 4.1% year-over-year increase, in line with analyst expectations. Net profit rose from $585 million ($1.02 per share) in the same period the previous year to $605 million ($1.07 per share). Emerson Electric Co. updated its 2026 full-year performance outlook, with adjusted earnings per share expected to be $6.40 to $6.55 (previously guided at $6.35 to $6.55), and net sales to grow by about 5.5%, as demand for its automation technology continues to grow in North America, India, the Middle East, and Africa. Facing intensified competition from generic drugs, Novartis AG Sponsored ADR pharmaceuticals (NVS.US) warns of lower profits in 2026. Novartis AG Sponsored ADR pharmaceuticals reported fourth-quarter revenue of $13.34 billion, a 1.4% year-over-year increase, $740 million lower than expected; non-GAAP earnings per share were $2.03, exceeding expectations by $0.03. Novartis AG Sponsored ADR anticipates a drop in profits this year, as some of its top-selling drugs, such as the heart treatment drug Entresto, will face further competition from generic drugs. The company stated on Wednesday that at constant exchange rates, its core operating profit might decline by a low single-digit percentage. Sales are expected to achieve a low single-digit growth. UBS Group AG (UBS.US) Q4 net profit increases by 56% year-over-year, significantly exceeding expectations, announces $30 billion stock repurchase plan and signals an increase. UBS Group AG's total revenue in the fourth quarter increased by 4% to $12.15 billion, beating the market's expected $11.75 billion; net interest income was $2.17 billion, up 18%, surpassing the market's expected $2.16 billion. Net profit attributable to shareholders was $1.2 billion, up 56% year-over-year, significantly exceeding the market's expected $967 million; diluted earnings per share were $0.37, compared to $0.23 in the same period the previous year. UBS Group AG reported a CET1 capital return rate of 6.6% in Q4, with a CET1 capital ratio of 14.4% at the end of the quarter, a CET1 leverage ratio of 4.4%, and a cost/income ratio of 84.7%. Looking ahead, UBS Group AG has maintained its 2028 financial goals, expecting a CET1 capital return rate of around 18% by 2028 and a cost/income ratio of approximately 67%. Novo Nordisk A/S Sponsored ADR Class B releases its 2025 financial report: Semaglutide sales reach DKK 228.288 billion, innovative drug pipeline promising. Novo Nordisk A/S Sponsored ADR Class B released its 2025 financial report. The company achieved total sales of DKK 309.1 billion for the year, a 10% increase from the previous year at fixed exchange rates. Sales of semaglutide drugs reached DKK 228.288 billion for the full year. Sales of the insulin version of semaglutide injection Ozempic (known domestically as Novo Nordisk) reached DKK 127.089 billion, and the weight loss version of semaglutide injection Wegovy (known domestically as Novo Ning) reached DKK 79.106 billion. Sales of the oral version of the insulin version of semaglutide tablets (known domestically as Novo Xin) reached DKK 22.093 billion. Since the introduction of Wegovy tablets (daily dosages of the oral semaglutide tablet 25 mg) to the US market on January 5, the total number of weekly prescriptions has reached approximately 50,000. Big bet amidst record-high performance: Banco Santander S.A. Sponsored ADR (SAN.US) acquires Webster (WBS.US) for $12 billion, aiming for a top ten position in the US. Banco Santander S.A. Sponsored ADR achieved a record net profit to shareholders of 14.101 billion, up 12% over the previous year; the bank's total revenue for the year remained high at 62.39 billion, essentially meeting the market's earlier target of 62 billion. The bank continued its explosive growth in the fourth quarter, with quarterly net profit reaching 3.764 billion, a 15% year-over-year increase. This historic performance was mainly attributed to a significant increase in customer activities globally and strong support from net fee income. Coinciding with the release of its financial report, Banco Santander S.A. Sponsored ADR dropped two "depth charges," announcing plans to acquire US-based Webster Financial Corporation (WBS.US) for $12 billion, while the board also approved a new $5 billion euro stock buyback plan. Strengthened by AIDS drugs, GlaxoSmithKline plc Sponsored ADR (GSK.US) Q4 profits exceed expectations. GlaxoSmithKline plc Sponsored ADR reported higher-than-expected profits in the fourth quarter, largely due to its HIV drugs and a now-approved asthma drug for lung disease treatment. The financial report shows that GlaxoSmithKline plc Sponsored ADR achieved quarterly revenue of 8.62 billion, a 6.3% year-over-year increase, surpassing expectations by 1.7 billion; adjusted earnings per share were 25.5 pence (about 35 cents), higher than analysts' estimates. The company also maintained its guidance for profit growth of 7% to 9% this year. Some analysts had previously estimated profits to grow by 6% to 8%, while a new CEO has set a target that could be surpassed, with the anticancer drug Blenrep expected to boost revenue. The company expects sales to exceed 40 billion by 2031. Oil and gas price weakness impacts performance! Equinor ASA (EQNR.US) sees a sharp drop in Q4 profits, reduces buyback plan to $15 billion. Due to falling oil and gas prices, Equinor ASA's fourth-quarter profits fell short of analyst expectations, leading the company to reduce its stock buyback plan. The financial report shows that the company's adjusted after-tax operating profit for Q4 fell to $1.55 billion, below the average analyst expectation of $1.59 billion. Net profit decreased from $2 billion in the same period the previous year to $1.31 billion. This Norwegian energy giant also announced on Wednesday that this year's share buyback program will be reduced to $15 billion, lower than the $50 billion level in 2025. The company forecasts that its 2026 total organic capital expenditures will reach $13 billion, similar to last year's $13.1 billion spending, but slightly above analysts' previous estimate of $12.9 billion. Important Economic Data and Event Previews 9:15 pm Beijing time: US January ADP Employment Change. 10:00 pm Beijing time: US December Durable Goods Orders revision, US December Factory Orders. 11:00 pm Beijing time: US January ISM Non-Manufacturing PMI. 11:30 pm Beijing time: US EIA Crude Oil Inventories change for the week ending January 30. 9:30 pm Beijing time: