Preview of US Stock Market | The three major stock index futures are not all rising or falling, and Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR (TSM.US) reported better-than-expected earnings yet still faced selling pressure.

Pre-market Market Trends 1. On July 16 (Thursday) pre-market, the futures of the three major US stock indexes were mixed. As of the time of writing, Dow Jones futures were up 0.17%, S&P 500 index futures were down 0.26%, and Nasdaq futures were down 0.93%. 2. As of the time of writing, the Germany DAX index was down 0.90%, the UK FTSE 100 index was down 0.19%, the France CAC40 index was down 0.83%, and the Euro Stoxx 50 index was down 0.56%. 3. As of the time of writing, WTI crude oil was up 0.18% at $79.74 per barrel. Brent crude oil was down 0.08% at $84.88 per barrel. Market News Extreme optimism turns into shackles? The perfect "blond girl" has arrived, but US stocks struggle to rise. Bullish stock market investors have been intoxicated by the beautiful scene of the "blond girl," and risk appetite has been pushed to extreme levels. However, it has become increasingly difficult to judge where the next upward momentum in the market will come from. Richard Privorotsky, a partner at Goldman Sachs Group, Inc., said, "Whether the stock market can continue to rise ultimately depends on earnings guidance and positioning levels, not just news headlines. Energy remains a key macroeconomic risk factor, but for now, the inflation environment is improving." Privorotsky pointed out that this earnings season is likely to deliver good results, with the banking industry having already crossed the performance threshold, and ASML Holding NV ADR's earnings showing healthy semiconductor capital spending demand. "Like most AI-related stocks, the issue is no longer limited to the data itself, but whether this data is impressive enough relative to the current position," he added. A survey released this week by Bank of America Corp showed that professional investors' cash holdings have dropped to record lows, while the bank's "Bull/Bear Indicator" has issued a warning signal. In addition, data from Deutsche Bank Aktiengesellschaft indicates that systematic strategies are currently heavily long, with little room left for further incremental buying. Trend-following CTAs' positions in stocks have risen to the upper end of historical ranges, at the 72nd percentile, while volatility control fund positions are even more extreme, at the 91st percentile. First rate hike by the Bank of Korea in three and a half years: AI chip boom drives policy shift towards tightening. On July 16, the Bank of Korea raised its policy rate by 25 basis points to 2.75%, the first rate hike since January 2023 and in line with market expectations. This marks the end of a four straight rate cut cycle that began at the end of 2024, signaling the start of a new tightening cycle. The root of this rate hike lies in a structural economic transformation driven by artificial intelligence. Economic growth has far exceeded expectations, and on July 14, the Korean government significantly raised its GDP growth forecast for 2026 from an initial 2.0% to 3.0%. If achieved, this would be the fastest growth rate since 2021. The nominal GDP growth rate is expected to reach 12.3%, the highest in 30 years since 1996. The International Monetary Fund has already raised its growth forecast for Korea in 2026 to 2.6%, the highest among 30 major economies. The Bank of Korea explicitly stated that this chip cycle is different from the past. In a report submitted to the National Assembly, the bank stated that the current expansion cycle began in March 2023 and has now lasted for 40 months, far exceeding the historical average of 29 months in the five expansion cycles between 2000 and 2020. The fundamental DRIVE comes from global technology companies' competitive investments to meet the revolutionary changes in the AI industry ecosystem, rather than traditional cyclical demand. South Korea's regulators roll out a "combination punch" to cool the market! Margin requirements raised, emergency halt to the listing of single-stock leveraged ETFs. South Korea will temporarily halt the listing of single-stock leveraged exchange-traded funds (ETFs) to curb market volatility. Previously, funds linked to Samsung Electronics and SK Hynix had gained popularity, leading to significant market volatility. In a statement on Thursday, the Financial Services Commission (FSC) of South Korea said the ban would remain in place until the market stabilizes. The regulator will also raise the minimum margin requirement for trading leveraged ETFs (i.e., the minimum balance required in a cash account) from 10 million won to 30 million won (approximately $20300), expected to take effect on August 5. These measures mark the most comprehensive efforts by the South Korean government so far to quell the frenzy of retail trading. Previously, this frenzy had turned the $4.1 trillion stock market into one of the hottest and most volatile markets globally. These rules were announced following a meeting of regulators, finance ministry officials, and central bank governors, with growing concerns about leveraged ETFs linked to Samsung and SK Hynix causing excessive market volatility. IEA issues "final ultimatum of weeks": if the Strait of Hormuz remains closed, the global economy will face new shocks. Fatih Birol, the head of the International Energy Agency (IEA), issued a stern warning at the Aspen Security Forum in Colorado on Wednesday: if the transport disruption in the Strait of Hormuz is not resolved within the next few weeks, the global economy will once again face serious challenges. Birol pointed out that the escalation of tensions between the US and Iran has left the market tense and facing "huge uncertainty," with crude oil, fertilizers, natural gas, and other goods transport in this key waterway under serious threat. "If the Strait of Hormuz remains closed, the global economy, including the economies of the Middle East, developing countries, and Asia, may face some difficulties again," Birol stressed. "The window to resolve the crisis is not in months, but in weeks," he said, adding that the strait must be "fully open, unconditionally open." Following the signaling of domestic investment last week, Japan's finance minister suggests economic growth may support the Government Pension Investment Fund reassessing its asset allocation. Finance Minister Koike Kozo delivered a key statement in parliament on Thursday. She stated that the government's ongoing policy transformation is significantly increasing Japan's potential growth rate, providing strong and reasonable grounds for the Government Pension Investment Fund (GPIF) to adjust its asset allocation and increase its holdings of domestic assets in future annual evaluations. Koike Kozo pointed out that as the world's largest public pension fund, the GPIF evaluates its investment portfolio in a timely and appropriate manner each fiscal year based on changes in macroeconomic assumptions. She emphasized that as the government focuses heavily on expanding investments, Japan's economy is at a crucial turning point in terms of structural change, with the higher potential growth rate naturally becoming a core consideration for the GPIF in its reassessment of its domestic and foreign asset allocation ratios. Stock-specific News "Buy the rumor, sell the fact" plays out once again! Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR (TSM.US) reports a 77% surge in Q2 net profit to a new high, but the stock price plunges nearly 5%. Thanks to strong demand for artificial intelligence (AI) chips globally, Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR (TSM.US) reported second-quarter profits well above expectations. Data shows that Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR recorded Q2 revenue of 1.27 trillion New Taiwan dollars ($394.5 billion), a 36% year-on-year increase, beating market expectations of 1.264 trillion New Taiwan dollars; net profit was 706.562 billion New Taiwan dollars, a 77.4% year-on-year increase and a 23.4% quarter-on-quarter increase, surpassing market expectations of 632.64 billion New Taiwan dollars. This global chip foundry recorded historic high net profits for the fifth consecutive quarter, driven by the explosive growth in global AI infrastructure demand that led to strong orders for advanced processes and packaging technology. Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR stated that 7-nanometer and below advanced process technology accounted for 77% of its total wafer revenue. The company currently expects capital spending in 2026 to reach $60-64 billion, higher than the previous forecast of $52-56 billion. The company also anticipates slightly higher revenue growth rates in US dollars, exceeding 40%, up from the previous forecast of over 30%. However, after the financial results were announced, the stock price of Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR plummeted nearly 5% in pre-market trading, as some investors opted to cash in profits after the positive results. Eli Lilly (LLY.US) makes a bold move with a $3.8 billion acquisition in the psychedelic drug race! Offers a 26% premium to acquire Atai Beckley (ATAI.US). Eli Lilly (LLY.US) has agreed to acquire Atai Beckley Inc. (ATAI.US) for up to $3.8 billion, highlighting the growing interest of major pharmaceutical companies in the once-marginal field of psychedelic drugs (psychedelic medicine). Eli Lilly will pay $6.75 in cash per share and will pay an additional $2.50 per share if certain drug development milestones are met. The base price represents a 26% premium over Atai Beckley's closing price on Wednesday. Japan aims to create a "Siasun Robot & Automation national team" by seeking to purchase 27,500 NVIDIA Corporation (NVDA.US) Rubins! AI computing power super cycle shifts from cloud to "physical AI." A consortium formed by the Japanese government and large Japanese companies, including the newly established company Noetra Corp, plans to purchase 27,500 next-generation AI GPUs from NVIDIA Corporation to accelerate the construction of a large AI computing infrastructure cluster. This infrastructure will be used to speed up the development of domestic Siasun Robot & Automation basic artificial intelligence models in Japan, as well as to accelerate the establishment of a large Siasun Robot & Automation cluster led by the Japanese government, supported by policies and rallying top companies. AI frenzy sparks demand for lithography machines! ASML Holding NV ADR aims to raise prices while Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR says "no." According to sources familiar with the matter, ASML Holding NV ADR plans to increase the prices of its chip manufacturing equipment, a move that may conflict with its largest customer, Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR. It is reported that Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR has opposed the price hike plan by the Dutch equipment manufacturer. The report states that ASML Holding NV ADR has recently discussed raising prices for its extreme ultraviolet (EUV) lithography systems with Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR. Additionally, in recent weeks, ASML Holding NV ADR has informed some clients of its plans to increase prices for its deep ultraviolet (DUV) lithography systems by 10%. However, Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR has stated that ASML Holding NV ADR's most advanced high numerical aperture (High NA) extreme ultraviolet lithography machine costs over 350 million euros (approximately $410 million) per machine, which is too costly and not suitable for large-scale production. However, Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR does currently use it for research purposes. Hardware and service prices rise in succession! Apple Inc. (AAPL.US) raises AppleCare+ monthly subscription prices by 50 cents. Apple Inc. has raised the fees for AppleCare+ services, continuing the trend of price increases amid global chip shortages and industry pressures. The monthly packages for AppleCare+ for Mac and iPad have increased by 50 cents, while the annual packages have risen by $5. This price increase only applies to new users, with existing users maintaining their current pricing. This price hike follows Apple Inc.'s recent increase in prices for iPad, Mac, Vision Pro headsets, HomePod smart speakers, and Apple TV set-top boxes last month. The market expects Apple Inc. to also raise prices for its most profitable iPhone product line when it launches the new generation models in September. Premium bid of 28% to "woo"! Stripe and Advent Capital offer $53.4 billion in cash to acquire PayPal (PYPL.US). It has been confirmed that digital payment giant Stripe and private equity firm Advent International have jointly made an offer to acquire PayPal, valuing the transaction at around $53.4 billion. According to sources, the acquirers have proposed a cash acquisition of $60.50 per share for the payment company. The sources stated that Stripe, Advent Capital, and Block have jointly provided $17 billion in equity investments for the offer. The board of directors of PayPal is set to discuss the offer at a meeting scheduled as soon as July 20. The offer was submitted earlier this month and includes around $50 billion in committed bank loan financing, representing a premium of approximately 28% over PayPal's closing price on Tuesday. UnitedHealth Group Incorporated (UNH.US) significantly raises full-year guidance, beats expectations with strong Q2 results, signaling a recovery. UnitedHealth Group Incorporated raised its full-year performance outlook and reported second-quarter profits well above Wall Street's expectations, helping to solidify the company's profit recovery following a historic collapse. The financial report showed second-quarter revenue of $112 billion, a 0.3% year-on-year increase, exceeding expectations by $1.14 billion; adjusted earnings per share were $6.38, surpassing expectations of $1.46. The healthcare giant now forecasts adjusted earnings per share for the year to be between $19.50 and $20.00, significantly higher than the previous forecast of above $18.25 and above analysts' expectations. As a key indicator of healthcare costs, the company's performance far exceeded the expectations of Wall Street analysts in a Bloomberg survey, with profits in the quarter exceeding the highest estimate. Company CFO Wayne DeVitt stated that the new outlook will be the starting point for achieving profit growth at the historic target speed next year. UnitedHealth Group Incorporated has long sought to achieve annual profit growth of 13% to 16%. He said in an interview that better healthcare cost data in the first half of the year has given the company confidence to raise its forecast. GE Aviation (GE.US) surpasses Q2 expectations, sees strong order growth, and raises full-year guidance. GE Aviation's second-quarter financial report shows earnings per share of $2.02 and revenue of $12.6 billion, both exceeding Wall Street's expectations of $1.86 and $11.9 billion, respectively. During the period, the company secured new orders totaling $16.5 billion, exceeding revenue for the same period and representing a 17% increase over the same period last year, highlighting strong demand for its products and services. Looking ahead to the full year 2026, the company forecasts revenue growth to be raised from the original 10%-12% range to "high double-digit numbers range"; full-year earnings per share expectations have also been raised from the previous $7.10-7.40 to $7.65-7.85. Moving forward on multiple fronts, Abbott Laboratories (ABT.US) beats Q2 expectations and raises profit forecast. Abbott Laboratories delivered better-than-expected results in the second quarter, thanks to continued improvements across most business segments, prompting the company to raise its profit forecast for 2026. In a statement on Thursday, Abbott Laboratories reported second-quarter sales of $12.6 billion, above market forecasts of $12.5 billion; adjusted earnings per share for the second quarter were $1.31, exceeding market predictions of $1.28. Looking ahead, the company expects adjusted earnings per share for the year to be between $5.45 and $5.60, with the mid-range of the guidance increasing by 5 cents.