Preview of US Stock Market | The three major stock index futures are mixed, with chip and optical communication stocks generally rising before the market opens, and Wall Street remains confident in the bull market in the second half of the year.

Pre-market market trends 1. Before the market opened on July 6 (Monday), the futures of the three major US stock indexes varied. As of the time of writing, the Dow Jones futures fell by 0.20%, the S&P 500 index futures rose by 0.32%, and the Nasdaq futures rose by 1.08%. 2. As of the time of writing, the German DAX index fell by 0.10%, the UK FTSE 100 index fell by 0.38%, the French CAC 40 index rose by 0.04%, and the Euro Stoxx 50 index fell by 0.21%. 3. As of the time of writing, WTI crude oil fell by 0.23%, to $68.53 per barrel. Brent crude oil fell by 0.25%, to $71.94 per barrel. Market News Concerns about inflation as US stocks enter a "calm week": Service industry PMI and consumer giant earnings reports take center stage, with SK Hynix's IPO on Friday becoming the focus. Investors are expected to have a relatively calm week following a holiday-shortened trading week packed with labor market data and surprising non-farm payroll reports. Monday is likely to be the most watched day on the economic calendar, with a series of index readings from S&P Global, Inc. and the Institute for Supply Management (ISM) providing insights into the state of the US service sector. In terms of corporate earnings, PepsiCo, Inc. on Thursday and Delta Air Lines, Inc. on Friday will be the focus this week. PepsiCo's performance should provide insights into the state of the US consumer, while Delta Air Lines will offer another interpretation of the lasting impact of the Iran war and the energy crisis it sparked. SK Hynix is expected to debut on the NASDAQ on July 10 (Friday), with a $29 billion IPO expected to be the largest foreign company IPO in history. Wall Street's outlook for the second half of 2026: Consensus on the bull market remains unchanged, but "AI solo" is shifting towards more diversified growth. After a first half of the year marked by political turmoil for GEO Group Inc, oil price fluctuations, and dramatic swings in interest rate expectations, Wall Street is entering the second half of 2026 with greater confidence. While there is a huge disparity among major institutions in year-end targets for the S&P 500 index from the most pessimistic at 7000 points to the most optimistic at 8250 points, spanning over 1200 points the overall tone remains bullish. The consensus is that the US bull market is not over yet, but the main focus for profit-making may shift from overcrowded chip and artificial intelligence (AI) stocks, towards more diverse areas such as industry, healthcare, materials, and small to mid-cap companies. A 9% gain for the year may disappear! Bank of America warns: Speculative sentiment has reached extremes, and the US stock market is heading towards a devastating "pullback." The S&P 500 index has just posted its best quarterly performance since 2020, with a cumulative gain of about 9% so far this year. However, Bank of America believes that the good times may be near an end, with the market likely to see a significant decline in the near future. The bank reiterated its year-end price target for the benchmark index at 7100 points, implying a decline of about 5% from last week's closing level. Bank of America stated: "The bearish signals we monitor indicate that speculative sentiment is approaching extremes, with high valuation stocks showing clear signs of sharp upward gaps. Historically, this situation often heralds a 'significant valuation rollback'." The bank further stated that compared to historical trends, the free cash flow to net profit ratio of S&P 500 constituent companies is low, primarily due to "mega-cap companies" significantly increasing capital spending in the AI wave, leading to a sharp contraction in free cash flow and eroding overall earnings quality. AI trading dynamics change! Morgan Stanley speaks out: Chip stocks lose momentum, funds to rotate to mega-cap cloud providers. Morgan Stanley strategist Michael Wilson said that as investors withdraw from some of the strongest performing tech stocks this year, the US stock market will struggle to reach new highs. Meanwhile, Wilson said that as investors shift funds to previously lagging sectors including mega-cap cloud computing providers in AI the momentum of semiconductor stocks is diminishing. He noted that this group includes companies like Microsoft Corporation, Amazon.com, Inc., and Meta. With strong core businesses, these companies are attractive in the AI ecosystem. Wilson pointed out that in the short term, major US indices will continue to face pressure, "as some of the largest market cap companies in the indices are experiencing momentum declines." He added that this fund rotation will continue in an "overall weak and volatile stock market environment." Hormuz navigation recovery combined with OPEC+ tentative increase in production: Wall Street is bearish on oil prices in the second half of the year, with Citi warning of a possible drop to $60 by the end of the year. Continuous navigation through the Hormuz Strait and signals from OPEC+ to increase supply have heightened concerns about oil oversupply in the market. OPEC+ member countries have agreed to moderately increase production quotas next month, with seven countries led by Saudi Arabia and Russia agreeing to increase daily production by 18.8 thousand barrels, further reducing the production cuts implemented several years ago. Currently, these additional production levels remain theoretical, but the decision by the organization indicates a desire to increase output as the situation continues to normalize. In this context, Wall Street investment banks predict further significant price declines in the second half of the year, with Citi Group stating that prices could fall to $60 by the year-end. Individual stock news US chip stocks rose before the market opened. On Monday before the market opened, as of the time of writing, Western Digital Corporation (WDC.US) and SanDisk (SNDK.US) rose by over 5%, Micron Technology, Inc. (MU.US), Seagate Technology Holdings PLC (STX.US), AMD (AMD.US), and Intel Corporation (INTC.US) rose by over 3%, and Broadcom Inc. (AVGO.US) rose by nearly 3%. In addition, ASML Holding NV ADR (ASML.US) rose by over 4%, and Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR (TSM.US) rose by nearly 3%. US optoelectronic stocks rose before the market opened. On Monday before the market opened, as of the time of writing, AXT Inc (AXTI.US) rose by over 6%, Marvell Technology, Inc. (MRVL.US), Astera Labs (ALAB.US), Nokia Oyj Sponsored ADR (NOK.US) rose by nearly 4%, Credo Technology (CRDO.US) rose by over 3%, Corning Inc (GLW.US), Tower Semiconductor Ltd (TSEM.US) rose by over 2%, and Coherent (COHR.US) rose by nearly 2%. Manufacturing process bottleneck! NVIDIA Corporation's next generation AI rack system Kyber may be postponed until 2028. According to research firm SemiAnalysis, due to manufacturing process issues, NVIDIA Corporation's next generation artificial intelligence (AI) rack system Kyber may be delayed until 2028. This is the latest in a series of recent product delays for NVIDIA Corporation, raising further concerns about the company's product roadmap. Kyber NVL144 is a server cabinet that can integrate 144 of NVIDIA Corporation's most powerful chips into a single system, enabling them to work together like a supercomputer to provide the computational power needed for AI enterprise training and running cutting-edge models. The architecture uses a vertical installation of graphics processing unit (GPU) compute trays instead of horizontal mounting to increase chip integration density and reduce latency, originally planned to be launched in 2027 alongside the Vera Rubin Ultra NVIDIA Corporation's next generation rack-level system. SemiAnalysis reported on Monday that the delay is due to the high manufacturing difficulty of the system's core printed circuit board. The organization stated: "Due to the significant challenges in the manufacturing process for the PCB midplane, the Kyber NVL144 rack architecture has been postponed to 2028." Solstice Advanced Materials (SOLS.US) in talks to merge with Element Solutions (ESI.US), potentially creating a $27 billion specialty chemicals giant. Solstice Advanced Materials is in talks to undergo a "merger of equals" with Element Solutions, with the combined specialty chemicals giant potentially valued at $27 billion. Reports suggest that negotiations between the two companies are ongoing, with a deal possible as early as this week. However, no formal agreement has been reached yet, and there is still a possibility of the talks falling through. The discussions come at a time when both companies are looking to capitalize on the continued growth in demand for specialty chemicals in AI data centers and semiconductor manufacturing. In May, Solstice stated that demand for its Thermal Management products and refrigerants is growing in AI-driven data centers, and the need for advanced computing solutions in the semiconductor electronics materials sector is steadily increasing, driving growth in the company's business. Element Solutions mainly supplies specialty chemicals to the electronics manufacturing industry. The company reported that revenue in the first quarter of this year increased by over 40% year-over-year, primarily driven by AI-related demand. Important economic data and events forecast 22:00 Beijing time - US June ISM Non-Manufacturing PMI 23:00 Beijing time - Speeches by US Federal Reserve Board member Waller, European Central Bank Executive Board member Schnabel, European Central Bank Executive Board member Wenzel, and Swedish Central Bank Deputy Governor Sem.