Preview of US Stock Market | The three major stock index futures are mixed, and Samsung's financial report has caused technology stocks to weaken again.

Pre-market market trends 1. On July 7th (Tuesday), pre-market trading in the US stock market showed mixed movements in the futures of the three major stock indexes. As of the time of writing, the Dow Jones futures were up 0.30%, the S&P 500 index futures were down 0.18%, and the Nasdaq futures were down 1.11%. 2. As of the time of writing, the German DAX index was down 0.73%, the UK FTSE 100 index was up 0.33%, the French CAC 40 index was up 0.25%, and the Euro Stoxx 50 index was down 0.55%. 3. As of the time of writing, WTI crude oil was up 0.73% at $69.05 per barrel. Brent crude oil was up 0.89% at $72.63 per barrel. Market News Samsung's earnings report failed to impress investors, and the tech sector's weakness resurfaced. Samsung's second-quarter profit surged 19 times year-on-year due to strong demand for AI, but it only exceeded analysts' expectations by 6%. Its Seoul-listed stock price plummeted by as much as 10%, dragging other industry players like SK Hynix and Japanese Kioxia down. Disappointment in the market spread to pre-market trading in the US, with stocks of companies like Micron Technology, Inc., SanDisk, and other semiconductor companies falling as investors reevaluated expectations for companies associated with the AI spending boom. US stock market "double bubble" nearing extremes: Profit and price bubbles overlapping may trigger a 30%-50% correction. The AI investment boom continues to drive the uptrend in US stocks, with major indices like the S&P 500 hitting new highs. In this context, some bullish investors view forward price-to-earnings ratios as a key indicator, believing that current valuations are not in bubble territory. This assessment is based on the rapid upward revision of profit expectations for the next 12 months. Despite significant stock price gains, Wall Street's expectations for corporate profits remain strong. According to FactSet, S&P 500 companies are expected to achieve double-digit profit growth for the seventh consecutive quarter, with analysts currently estimating an overall profit growth rate of over 23%. However, there are doubts about whether this growth can be sustained in the long term. Some analysts point out that the current profit growth rate is significantly deviating from historical trends, while overall valuation levels remain in extreme territory. Looking at the market risk from another valuation perspective, the market appears more vulnerable. With the Shiller CAPE ratio, the current valuation of the S&P 500 is about 41 times earnings, approaching historical highs set during the dot-com bubble era. Further analysis indicates that unlike the internet era, when corporate profit growth was relatively moderate, current EPS growth has surpassed the long-term trend by 1.8 standard deviations. If profits were adjusted back to a more normal level, the CAPE ratio would rise to 67.6 times earnings, equivalent to being 4.6 standard deviations above the long-term trend. Analysts wrote that this would exceed the peak of all asset bubbles in US history. Based on this calculation, the report suggests that the current market not only has an overvaluation on a price level but also has exceptionally high profit expectations, nearing a state of "overlapping price bubbles and profit bubbles. Internal report from the US Treasury Department sounds alarm: If the AI industry repeats the dot-com bubble burst, it could trigger a systemic economic shock. A draft internal report from the US Treasury Department, obtained by the relevant media, warns of the potentially catastrophic consequences if the AI industry were to replicate the burst of the dot-com bubble at the turn of the century. While the Trump administration has publicly supported the artificial intelligence (AI) industry, professional analysts within the Treasury Department under its purview have issued a stern warning: AI companies are more deeply embedded in the US economy today than internet companies were at the turn of the century. If the AI market were to repeat the burst of the dot-com bubble, the resulting shockwave could sweep through the entire economic system. Analysts wrote, "A downturn in the AI industry will impact the stock market, private credit markets, enterprises financing data center construction, cloud service providers, chip manufacturers, and utility companies, causing ripples throughout the entire economic ecosystem." The report suggests that current AI investors are undertaking a massive risk, with the stability of the entire financial system largely dependent on whether AI can deliver the expected leap in productivity and profitability. Goldman Sachs Group, Inc.: Profit potential from heavy asset stocks expected to lead the uptrend, with a rotation of funds into a "protracted battle." Strategists at Goldman Sachs Group, Inc. believe that capital-intensive companies are poised to deliver robust earnings during this earnings season, further outperforming their lighter asset peers that rely more on manpower or digital assets. The team of strategists led by Guillaume Jaisson at Goldman Sachs Group, Inc. pointed out, "Investors are still under-allocated in a world where physical assets, infrastructure, and industrial capacity have regained strategic importance." Jaisson noted, "HALO" trades - or "Heavy Assets, Low Obsolescence" - are now entering a "more sustainable phase," where profit-driven rather than generalized valuation increases will drive the market. He emphasized that even within the heavy asset sector, the differentiation between winners and losers will continue to widen. Jaisson stressed, "We are not bearish on AI or light assets, but we believe that current relative valuations and fund flows are severely overdone. The core logic of HALO trades is that, in a world where physical assets are priced according to their scarcity, a premium for profit certainty will continue to exist." Former Fed official Brad: High probability of rate hike later this year, September key window. Jim Brad, current dean of the Purdue University Krannert School of Management and former chair of the St. Louis Fed, recently stated that even if the Federal Reserve chooses to hold steady at its July interest rate meeting, there is still a high probability of tightening later this year. Brad believes that current inflation levels remain persistently high, and the September interest rate meeting is a key window for the next round of rate hikes. He also questioned whether the productivity boost from AI could quickly change the Fed's monetary policy stance. He also pointed out two positive factors that could alleviate inflation pressures: the pricing of bond markets reflecting that the peak of inflation has passed, combined with recent international oil price declines, with the cooling effects gradually filtering through to inflation statistics in the coming months, giving the Fed a buffer period to wait and see. However, Brad emphasized that these short-term positives are not enough to replace active interest rate adjustments. Net long position in the US dollar expands to nearly $40 billion! Interest rate logic dominates forex market trends. Global traders' optimistic outlook on the US dollar has reached its highest level since 2015. As markets bet on the Federal Reserve maintaining high interest rates for a longer period, the US dollar has broken out of a month-long uptrend - rising 2% in June alone, making it one of the best-performing months of the year. The Commodity Futures Trading Commission (CFTC) report released on Monday showed that as of June 30, net long positions in the US dollar were approaching nearly $40 billion, reaching their highest level in over a decade. The core impetus for this round of US dollar strength comes from Federal Reserve Chair Powell's commitment to stabilizing prices, which directly boosts market expectations of rate hikes. Compared to other major central banks around the world, market expectations generally suggest that the Federal Reserve will tighten policy much more than its foreign counterparts, with the relative yield advantage of US bonds continuing to support the US dollar. WTI briefly falls below $69! Saudi Arabia's "cliff drop" in prices hits a 26-year record, warning of oil oversupply. With OPEC+ gradually increasing production, the resumption of navigation in the Strait of Hormuz, and a temporary peace agreement between the US and Iran, the global oil market is facing significant pressure from oversupply. Saudi state oil producer Saudi Aramco lowered the official selling price of its Arab Light crude oil to Asia next month by $11 per barrel, with the adjusted price being $1.50 below the regional benchmark price. This marks the second time since the price wars of 2020 and 2015 that this grade of crude oil is being sold at a discount. The price adjustment also marks the largest monthly official price cut since 2000. This move follows the decision last weekend by OPEC+ member countries, including Saudi Arabia, to increase production quotas next month, further reinforcing expectations of oversupply. Stock-specific News US chip stocks and optical communication stocks traded lower in pre-market trading. On Tuesday, pre-market trading in the US saw Western Digital Corporation (WDC.US) fall by nearly 7%, Seagate Technology Holdings PLC (STX.US) by nearly 6%, Micron Technology, Inc. (MU.US), SanDisk (SNDK.US) by over 5%, AMD (AMD.US), Intel Corporation (INTC.US) by nearly 4%, Broadcom Inc. (AVGO.US), Qualcomm (QCOM.US) by almost 3%, and NVIDIA Corporation (NVDA.US) by over 2%. As for optical communication stocks, Astera Labs (ALAB.US) fell by over 5%, Marvell Technology, Inc. (MRVL.US) by nearly 5%, Credo Technology (CRDO.US), AXT Inc (AXTI.US), Tower Semiconductor Ltd (TSEM.US) by over 4%, Coherent (COHR.US), Lumentum (LITE.US), Corning Inc (GLW.US) by over 3%, and Nokia Oyj Sponsored ADR (NOK.US) by over 2%. SpaceX (SPCX.US) joins the Nasdaq, with major Wall Street banks bullish. Despite a decline in SpaceX's stock price, the company's addition to the Nasdaq 100 index on Tuesday is expected to prompt passive and active funds to rebalance their portfolios. The aerospace and satellite company has received numerous bullish ratings from analysts after the end of its IPO quiet period, with at least six banks, including Morgan Stanley and Goldman Sachs Group, Inc., giving buy-equivalent ratings. "NVIDIA Corporation (NVDA.US) refutes rumors of delay in next-generation AI framework, Wall Street dismisses it as a 'sensational headline'." NVIDIA Corporation has refuted a report claiming that its next-generation "Kyber" artificial intelligence (AI) framework will be delayed until 2028, stating that "our roadmap is intact." Semianalysis previously released a report stating that the Kyber architecture, designed to accommodate NVIDIA Corporation's Rubin Ultra chip, will be delayed by over 12 months, extending to 2028. Trading department analyst Jordan Klein from Mizuho Securities also stated on Monday that investors must have seen this kind of news many times, with constant reports of delays in NVIDIA Corporation's new products due to manufacturing issues, all of which are sensational headlines and mere noise. Ming-Chi Kuo: Apple Inc. (AAPL.US) foldable iPhone could repeat the iPhone X's "hard-to-find" scenario, with initial shipments possibly less than a million units. According to Ming-Chi Kuo, an analyst at TF International Securities, Apple Inc.'s upcoming foldable iPhone could mirror the situation of the iPhone X's launch - facing manufacturing challenges due to innovative design, resulting in extremely limited initial supply and affecting the pace of the release. Ming-Chi Kuo's latest report is based on survey data from ShenZhen New Industries Biomedical Engineering, which shows that in the second half of 2026, assembly shipments of the foldable iPhone are estimated to be around 7-8 million units, with initial shipments in the third quarter ranging between 500,000 and 1 million units. In comparison, the combined shipments of the iPhone 18 Pro and Pro Max during the same period are expected to reach 20-22 million units, showing a stark difference. EDA giant strategizes a shift! Synopsys, Inc. (SNPS.US) reportedly terminates crucial wafer manufacturing software development, shifting resources to high-profit businesses like AI chip design. Several sources have revealed that the US electronic design automation (EDA) giant Synopsys, Inc. plans to discontinue a suite of widely used manufacturing process control software by global semiconductor manufacturers. This decision aims to redirect resources to high-profit businesses like AI chip design. Sources stated that Synopsys, Inc. notified over 10 semiconductor manufacturers, including Samsung Electronics, SK Hynix, Kioxia, and Qorvo (QRVO.US), in April and May this year that they will implement an "end-of-life (EOL)" plan for the products in question. This means that Synopsys, Inc. will no longer release new versions of this software, only fulfilling existing maintenance obligations. This move highlights a changing landscape in the semiconductor software industry, with software suppliers increasing their investments in AI design technology, while some semiconductor manufacturers are increasingly opting to develop their own manufacturing software. Record-breaking $10 billion acquisition: Vertex Pharmaceuticals Incorporated (VRTX.US) acquires Crinetics (CRNX.US) at a premium of 100%, breaking into the endocrine race. Vertex Pharmaceuticals Incorporated has agreed to acquire Crinetics for $10 billion in cash, marking the largest deal in Vertex Pharmaceuticals Incorporated's history and aiming to expand its business into the endocrinology field. The acquisition price of $85 per share represents a 102% premium over Crinetics' closing price on Monday. Crinetics' core product is a daily oral drug called Palsonify, designed to treat a rare pituitary disease. The company is also developing a therapy for congenital adrenal hyperplasia, a genetic disease. Vertex Pharmaceuticals Incorporated stated that these drugs could generate over $5 billion in annual revenue at their peak. As of the time of writing, Vertex Pharmaceuticals Incorporated was down nearly 1% in pre-market trading, while Crinetics surged by nearly 99%. Oil price volatility leads to excess profits! Shell (SHEL.US) trading business becomes a "money-printing machine," hedging against production losses. When Qatar's natural gas plants shut down due to war, overall natural gas production plummeted by about 30% from the first quarter, but Shell's trading division produced remarkable results. A forward-looking update on second-quarter performance released by the London-based energy giant on Tuesday showed that oil trading profits remained on par with its strong first-quarter performance, while natural gas trading performance was "significantly higher". Against the backdrop of a substantial drop in production, the trading business's outstanding performance establishes a solid profit foundation for the official financial report set to be released on July 30th. As of the time of writing, Shell was up over 2% in pre-market trading.