Preview of US Stock Market | The three major stock index futures rose and fell unevenly, and the Federal Reserve interest rate decision will strike tonight.

Pre-Market Market Trends 1. In pre-market trading on June 17th (Wednesday), the futures of the three major stock indices in the US fluctuated. As of the time of writing, Dow futures fell by 0.02%, S&P 500 index futures rose by 0.05%, and Nasdaq futures rose by 0.41%. 2. As of the time of writing, the German DAX index fluctuated by 0.15%, the UK FTSE 100 index fell by 0.05%, the French CAC 40 index rose by 0.09%, and the European Stoxx 50 index rose by 0.35%. 3. As of the time of writing, WTI crude oil rose by 0.83% to $76.68 per barrel. Brent crude oil rose by 0.80% to $79.59 per barrel. Market News The Federal Reserve's June meeting is expected to remain unchanged, marking the first decision under the new chairman, Kevin Wash. The Fed is expected to maintain the federal funds rate at 3.50%-3.75% at its June 2026 meeting for the fourth consecutive time due to continued inflation and uncertainty about the pace of price pressure relief. This meeting will be the first decision by the new chairman, Kevin Wash, who was initially expected to lean towards rate cuts and loose policies, but market expectations have now shifted to a more hawkish stance. Despite the temporary peace agreement between the US and Iran, oil prices remain higher than pre-conflict levels, with recent labor market data indicating continued strong employment. Investors will closely watch the Fed's updated economic forecasts, including the "dot plot," to look for signals of future rate paths. However, many analysts expect Chairman Wash not to participate in this dot plot forecast. In March of this year, the Fed had previously predicted one rate cut in 2026 and another in 2027. Castle Securities Warning: Market Misjudgment! The risk of consecutive rate hikes by the Fed in September has increased, with a cumulative tightening of 75 basis points expected by the end of the year. Castle Securities pointed out that as inflationary pressures become more entrenched and widespread, the likelihood of the Fed initiating consecutive rate hikes as early as September is rising. Frank Flett, head of macro strategy at the firm, stated in a report to clients that despite the fall in oil prices following the temporary peace agreement between the US and Iran, the cumulative inflationary pressure during the conflict period has become deeply rooted. He further noted that loose financial conditions, incomplete supply chain bottlenecks, accelerating labor markets, and the emergence of the artificial intelligence investment boom, combined with other factors, continue to support high price pressures. In this context, Flett expects Fed Chair Wash to signal a more hawkish stance at the first policy meeting on Wednesday, with the risks of rate hikes gradually accumulating towards September, December, and March 2027. This outlook is more aggressive than the current market pricing - interest rate swaps show that the probability of a rate hike in September is only about one-third. Wall Street Debates the Future of US Stocks! Optimists see the S&P 500 reaching 9000 points, while bears warn of multiple tests ahead for the rally. Investment bank Evercore ISI maintains its positive outlook on the US stock market. The firm believes that the significant amount of cash reserves held by investors will continue to support further gains in US stocks and predicts that under optimistic scenarios, the S&P 500 index could reach 9000 points by the end of the year. Yadi and JPMorgan Asset Management also believe that strong corporate earnings growth will continue to support the stock market. However, an increasing number of Wall Street institutions, including Castle Securities and PGIM, are issuing warnings about the future trajectory of risk assets. With the geopolitical risk of the conflict in the Middle East subsiding, US stocks may face a true test ahead. The US and Iran will sign an agreement on Friday, with Trump stating that the Strait will be permanently open and the US-Iran agreement documents will be released in the next few days. US President Trump stated that the Strait of Hormuz will fully reopen on Friday (June 19th) and will remain permanently open for free navigation. He announced that vessels will begin to pass smoothly, oil will begin to flow, oil prices are rapidly decreasing, and the stock market will quickly rise. Trump also reiterated that Iran will not possess nuclear weapons. The United States and Iran will officially sign a memorandum of understanding in Switzerland on Friday. Following the signing, both parties will start 60 days of talks focusing on unresolved issues, including the Iran nuclear issue. Trump stated that even after the 60-day negotiations, the Strait of Hormuz will remain open for free navigation. Trump promised to release the peace agreement documents with Iran to the media in the next few days, and may hold a press conference to read them word by word. He did not rule out submitting the Iran nuclear agreement for congressional approval. However, there are conflicting statements from both the US and Iran on whether the Strait will be "permanently free." Iran has stated that they will only grant ships 60 days of free passage and plan to generate revenue by providing services such as safe navigation. Iran also emphasized that the future management of the Strait of Hormuz will be jointly decided by Iran and Oman. Quarterly Cash Burn Exceeds Revenue by Half! OpenAI's performance reveals a surge in enterprise AI applications, but also exposes heavy pressure from computing costs. According to a document disclosed to shareholders, the developer of ChatGPT, OpenAI, burned $3.7 billion in cash in the first quarter of 2026, which is roughly half of the $5.7 billion quarterly revenue for that period. Just a day before, reports stated that as this ChatGPT developer prepared for an IPO on the US stock market, its expenditure in 2025 was around $34 billion, raising questions about the financial sustainability of this globally valued high AI application company and its fundamental growth prospects. However, from a positive perspective, the strong revenue growth of OpenAI highlights a significant surge in demand for global AI applications. Still, the business model of top AI large model companies has entered a stage of "strong revenue growth, high capital consumption, and high depreciation pressure," forming a heavy capital AI arms race, also known as the stage of "skyrocketing revenue and simultaneous loss." Demand Destroyed by War, Supply Set to Surge! IEA warns: the oil market will slide into a "significant surplus" in 2027. The International Energy Agency (IEA) released a report on Wednesday warning that the oil supply shock caused by the Iran war has weakened global crude oil demand to some extent. If the conflict can be resolved permanently, the supply may bounce back significantly, possibly creating a significant oil surplus by next year. In its latest monthly oil market report, the IEA significantly reduced its global daily demand growth forecast for 2026 to 1.1 million barrels, down by 700,000 barrels per day from the previous month's prediction. The report noted that global oil delivery volumes plummeted by 5 million barrels per day in the second quarter of this year, which is the main reason for this downgrade. Meanwhile, global oil production in May dropped to 94.5 million barrels per day, down by 600,000 barrels per day month-on-month, and a significant decrease of 13.6 million barrels per day from the pre-war level. The IEA predicts that global daily supply will decrease by 3.9 million barrels year-over-year in 2026 to around 102.4 million barrels, but is expected to rebound strongly to 110.3 million barrels by 2027. The agency pointed out that the decline in demand reflects dual pressures from high fuel prices and shortages of refined products, emphasizing that the impact of the conflict has already extended beyond simple supply-side shocks. However, the IEA also stated that by 2027, global supply is expected to increase by around 8 million barrels per day, reaching approximately 110 million barrels per day, far exceeding the modest recovery level of 200 million barrels per day by then. Individual Stock News Microsoft Corporation (MSFT.US) terminates $3 billion Oracle Corporation computing lease due to security and compliance concerns; Goldman Sachs Group, Inc. warns: AI infrastructure facing a "fragile moment." Microsoft Corporation has reportedly walked away from a $3 billion agreement to lease Oracle Corporation's cloud computing power due to security concerns. In response, Oracle Corporation stated on Tuesday that the reports were inaccurate. Microsoft Corporation declined to comment. Insiders had previously revealed that Microsoft Corporation had been in negotiations with Oracle Corporation for the use of the latter's cloud infrastructure, but the deal fell through due to security and compliance issues. The deal was reportedly valued at over $3 billion. Following this news, Oracle Corporation fell by 2.24%, and Microsoft Corporation fell by 1.48% by the end of Tuesday's trading. It is worth noting that the market has been highly sensitive to such AI infrastructure news. In the previous week, AI infrastructure company Crusoe temporarily halted operations on a 1.8GW data center project in Wyoming at the request of a customer, leading to a sharp drop in related stocks. Goldman Sachs Group, Inc. partner Rich Privorotsky warned that with market positions, leverage, and AI capital expenditures deeply intertwined, the risks of the AI ecosystem cycle "cannot be ignored." Even sporadic delays, postponements, or changes in priorities are enough to force investors to reconsider their assumptions about future demand. AI is too costly, and even Microsoft Corporation can't bear it: considering introducing a "low-cost" version of the expensive DeepSeek V4 model. Microsoft Corporation is reportedly considering introducing a refined version of the DeepSeek V4 model into its enterprise AI tool Copilot Cowork as a low-cost alternative to the current Anthropic and OpenAI models. The company revealed that it is conducting a thorough assessment of the refined version of DeepSeek V4 and other open-source models, with plans to launch this low-cost model option in the coming weeks, where the final choice will be confirmed. Microsoft Corporation emphasized that if DeepSeek is ultimately chosen, the model will only be offered as an optional solution for customers and will be fully hosted on the Microsoft Corporation Azure cloud platform. This means that customer data will remain within the Microsoft Corporation cloud environment and will continue to be protected by Azure's enterprise-level security, compliance, and data residency. Intel Corporation (INTC.US) enters the risk production stage with 18A-P, analysts call it a "key milestone" for recovery. Intel Corporation announced at the VLSI Symposium in Honolulu that its new 18A-P process node has officially entered the risk production stage, which is the early stage of chip manufacturing transitioning from development to mass production. Analysts consider this move as a "key milestone" for Intel Corporation's recovery, signaling the start of production for its most advanced process node, bringing it closer to the goal of manufacturing chips for Apple Inc. devices. Alphabet Inc. Class C (GOOGL.US) launches Android 17 system, AI features to be rolled out in phases, while Wear OS and XR ecosystem are simultaneously upgraded. Alphabet Inc. Class C officially released the Android 17 operating system on Tuesday. While the new system has begun rolling out to Pixel devices, the highly anticipated Gemini artificial intelligence (AI) features will be gradually launched over the next few months. According to information released by Alphabet Inc. Class C, Android 17 is first available to Pixel series devices, with other Android smartphone brands expected to receive updates in the coming months. Compared to previous versions, the focus of the Android 17 upgrade is on multitasking, content creation, gaming experience, security privacy, and AI capabilities, paving the way for Alphabet Inc. Class C's future higher-tier Agentic AI features. Industry experts believe that following Apple Inc.'s recent release of the new AI-powered Siri, Alphabet Inc. Class C is further strengthening its Gemini ecosystem through Android 17 to consolidate its competitive advantage in the mobile AI field. Apple Inc. (AAPL.US) pulls out all the stops in 2027! Plans to launch AI version of AirPods, foldable screens, and 20th-anniversary edition iPhone. According to sources, Apple Inc. is preparing for its largest product upgrade plan in recent years. Over the next two years, the company plans to release a series of flagship products, including the first foldable screen iPhone, a 20th-anniversary commemorative version of the iPhone, AI-powered AirPods with cameras, and smart glasses, among other high-profile products, to significantly enhance its hardware AI ecosystem. Market analysis suggests that this will not only mark the first major product cycle under the leadership of the new CEO at Apple Inc, but also determine whether the company can regain the innovation initiative in the consumer electronics industry in the AI era. Stock Price Rockets! SpaceX (SPCX.US) surges by 49% in three days after listing, surpassing Amazon.com, Inc. (AMZN.US) to enter the top five globally. SpaceX has risen for the third consecutive trading day, with a market value surpassing that of Amazon.com, Inc., to become the fifth largest listed company globally. By the end of Tuesday's US stock market closing, SpaceX rose by 4.8%, accumulating a total gain of 49% since its listing, with a market value of $2.65 trillion, approximately $8 billion higher than that of Amazon.com, Inc. At one point on Tuesday, Elon Musk's rocket and AI company even surpassed Microsoft Corporation (MSFT.US) to briefly become the fourth largest listed company globally. In pre-market trading on Wednesday, SpaceX continued to rise by about 2%. Important Economic Data and Event Forecast 20:30 Beijing time: US Retail Sales MoM for May. 22:00 Beijing time: US Pending Home Sales Index MoM Seasonally Adjusted for May. 22:30 Beijing time: US EIA Crude Oil Inventory Change for the week ending June 12. 02:00 Next day Beijing time: Fed FOMC announces interest rate decision and summary of economic projections. 02:30 Next day Beijing time: Fed Chair holds a press conference on monetary policy. Earnings Preview Before the market opens on Thursday: Accenture Plc Class A (ACN.US), Kroger Co. (KR.US)