Preview of US Stock Market | The three major stock index futures all fell, U.S. Treasury yields and oil prices rose, and most technology stocks weakened.

Pre-Market Market Trends 1. As of August 18 (Tuesday), U.S. stock futures for the three major indices are all declining. At the time of publication, Dow futures are down 0.02%, S&P 500 futures are down 0.36%, and Nasdaq futures are down 1.06%. 2. As of the time of publication, Germany's DAX index is down 0.37%, the UK's FTSE 100 index is up 0.13%, France's CAC 40 index is down 0.47%, and the Europe Stoxx 50 index is down 0.43%. 3. As of the time of publication, WTI crude oil is up 0.55%, at $84.20 per barrel. Brent crude oil is up 0.21%, at $91.06 per barrel. Market News The situation in the Middle East escalates! Both the U.S. and Iran "do not seek to extend" the memorandum of understanding. As the 60-day negotiation window set by the U.S.-Iran memorandum of understanding expires, neither party has initiated formal negotiations or reached a new agreement. President Trump stated he has no intention to extend this temporary ceasefire agreement and threatened to bomb Oman, claiming that the Gulf state might obstruct the peace agreement. A senior Iranian official said in a recent interview that Iran has set a deadline of several weeks for the U.S. to fully implement the U.S.-Iran memorandum of understanding, and Iran will not wait indefinitely for the U.S. to continue its maritime blockade. The official remarked that due to the "stalemate in efforts to reach a permanent ceasefire agreement with the U.S.," Iran has decided to shift its policy "from defensive to full offensive." According to a Bank of America fund manager survey: Stock holdings reach a nearly five-year high, yet Hartnett warns "its time to retreat." The latest global fund manager survey from Bank of America reveals that bullish global investors have increased stock holdings to the highest level in nearly five years, with very few bears. The team of strategists led by Michael Hartnett stated that a net 56% of surveyed fund managers are overweight in stocks, the highest percentage since November 2021, while cash allocation has dropped to a "very low" 3.5%. Hartnetts team added: "Market consensus believes that the macro economy will not land, the Fed will not raise interest rates, AI capital expenditures will not be cut, the Democrats will not achieve a sweeping victory, and shorts will not gain the upper hand." However, they simultaneously warned that the current positioning signals "continue to advise investors to retreat or rotate into safer assets rather than increase their positions," and reiterated the view to shift towards more defensive sectors. Sticky inflation, AI debt, and fiscal disorder exert multiple pressures, causing U.S. bond yields to rise. The increase in oil prices due to extended conflicts may further intensify domestic price pressures in the U.S., strengthening the case for Fed rate hikes. Meanwhile, a surge in corporate borrowing driven by the global AI computing investment boom has led Washington and Silicon Valley to compete for a limited pool of capital. As of the time of publication, the "anchor for global asset pricing"the 10-year U.S. Treasury yieldstands at 4.744%, and the 30-year Treasury yield at 5.331%. Once U.S. Treasury yields continue to rise, the impacts will extend beyond bondsvaluations of technology stocks, corporate financing, carry trades, cross-border capital, and even risk appetite in emerging markets could be re-priced accordingly. U.S. debt may surpass $40 trillion months ahead of schedule. Reports indicate that U.S. debt could exceed the $40 trillion mark this week, a few months earlier than predicted, partly due to the overturning of Trumps tariff policies, which has resulted in billions of dollars in lost revenue. The revenue loss has forced the U.S. Treasury to accelerate borrowing to cover national expenditures. Six months ago, the Congressional Budget Office forecasted that the total U.S. debt would reach $39.4 trillion in this fiscal year. However, new Treasury data released on Monday shows that debt has reached $39.9 trillion and continues to grow. The accelerated accumulation of debt means that the next deadline for raising the statutory borrowing limit may also arrive earlier. Just last year, Congress had set the borrowing limit at $41.1 trillion. Budget analysts have pointed out that borrowing could reach this threshold as early as the beginning of next year, forcing legislators to either suspend the debt ceiling or raise it again to avoid the risk of economic turmoil from a default. Has the Fed's policy actually become "easier"? The San Francisco Fed's new model of neutral interest rates provides theoretical ammunition for hawks. A study released by the San Francisco Fed on Monday indicates that if the mid-term estimate of the so-called neutral interest rate is used as a benchmarkfor the rate level that neither suppresses nor stimulates the economythen the Feds current policy interest rate is likely in an easing phase. This conclusion contrasts with the judgments of most current Fed policymakers, who believe that the monetary policy is still restrictive or may already be at a neutral level. This conclusion is also conflictual with the picture of long-term neutral rate estimates presented by Fed policymakers; according to those estimates, the current benchmark interest rate range of 3.50%3.75% could be about 0.5 percentage points above the neutral level. Fed policymakers frequently use neutral rate estimates to help determine whether monetary policy is tight or loose, influencing decisions on whether to raise or lower rates. Individual Stock News Most U.S. tech stocks decline pre-market. As of the time of publication, Western Digital Corporation (WDC.US) and Seagate Technology Holdings PLC (STX.US) are down over 5%, SK Hynix (SKHY.US), SanDisk (SNDK.US), Intel Corporation (INTC.US), and Micron Technology, Inc. (MU.US) are down over 4%, ASML Holding NV ADR (ASML.US) and AMD (AMD.US) are down over 3%, Oracle Corporation (ORCL.US), Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR (TSM.US), and SpaceX (SPCX.US) are down over 2%, and NVIDIA Corporation (NVDA.US) is down nearly 2%. Optical communication stocks generally fell, with Lumentum (LITE.US) down nearly 6%, Marvell Technology, Inc. (MRVL.US), and Coherent (COHR.US) down over 5%. Tesla, Inc. (TSLA.US) Cybercab set to launch in Austin this month, with employees as the first "trial passengers." According to reports cited by tech media from informed sources, Tesla, Inc. has informed internal employees that it is pressing ahead with the public release of Cybercab, planning to launch first in Austin, Texas, as early as this month. Cybercab is a vehicle specifically designed for autonomous driving, eliminating the steering wheel and pedals, and is seen as the core carrier of the company's Robotaxi strategy. Tesla, Inc. plans to deploy this model widely in its autonomous ride-hailing service network. Employees have been informed that the Cybercab will be first available for ride-hailing experiences on public roads for internal staff, and within days, the vehicle will officially join Austin's Robotaxi service fleet. In recent weeks, the company has undertaken various preparations, including test drives, offering ride experiences on private roads, and conducting training drills in partnership with local emergency response departments. Home improvement spending remains resilient amid housing market downturn! Home Depot, Inc. (HD.US) Q2 results exceed expectations, maintaining full-year sales guidance but warning of ongoing uncertainties. Home Depot, Inc. reported second-quarter results that surpassed market expectations, indicating that consumer spending on home improvement projects remains resilient despite high borrowing and housing costs. The financial report shows that for the second quarter ending August 2, Home Depot, Inc. experienced a year-over-year revenue increase of 5.7% to $47.86 billion, better than analysts average expectation of $47.24 billion; same-store sales grew by 1.7%, the highest growth rate since the end of 2022, significantly exceeding analysts' average expectation of 0.94%; adjusted earnings per share were $4.92, above the analysts average expectation of $4.73. The company reiterated its full-year sales guidance but simultaneously warned that due to concerns about housing affordability, borrowing costs, and consumer uncertainty, the broader real estate market has yet to recover, and uncertainties remain in outlook. As of publication, Home Depot, Inc. was up nearly 2% in pre-market trading on Tuesday. Leading optical communication ODM Fabrinet (FN.US) reports Q4 revenue up 45% year-over-year, first-time data center revenue surpassing 50% of total revenue. The financial report revealed that Fabrinets fourth quarter revenue reached $1.316 billion, a 45% year-over-year increase, exceeding the market expectation of approximately $1.27 billion, and setting a revenue record for the twelfth consecutive quarter; non-GAAP earnings per share were $4.10, above the analysts average expectation of $3.81. Data center revenue reached $669 million, accounting for 51% of total revenue. This segment covers products such as optical transceivers, data center interconnects, high-performance computing components, silicon photonics, and co-packaged optics (CPO), primarily benefiting from demand for AI infrastructure and hyperscale data center construction. The company also provided an outlook for fiscal Q1 2027 that exceeded expectations. Despite the financial results and guidance surpassing predictions, as of the time of publication, the stock was down over 9% in pre-market trading on Tuesday. Some analysts suggest that the stock has reached a relatively fair value. Investors might be reassessing valuations, especially as high-growth expectations have already been reflected in the stock price. Better-than-expected results! BHP Group Ltd Sponsored American Depositary Receipt Repr 2 Shs (BHP.US) sees a 30% increase in annual profit, with copper revenue surpassing iron ore for the first time. Due to booming commodity prices driving up earnings, BHP Group Ltd Sponsored American Depositary Receipt Repr 2 Shs saw profits rise by nearly one-third, with annual copper revenue surpassing iron ore for the first time. The world's largest mining company reported revenue of $58.8 billion for the 12 months ending June, a 15% year-over-year increase, exceeding expectations of $57.8 billion; net profit attributable to shareholders rose to $13.2 billion, a 30% increase, surpassing analysts expectations of $12.6 billion. The copper segment contributed more than half of the company's underlying EBITDA for the first time, generating substantial free cash flow, indicating that growth in its copper business is now self-sustaining. Important Economic Data and Event Announcements At 21:15 Beijing Time: U.S. July industrial production month-on-month rate. Earnings Announcements Wednesday morning: Keysight Technologies Inc (KEYS.US), ZTO Express (Cayman), Inc. Sponsored ADR Class A (ZTO.US), Lufax Holding Ltd Sponsored ADR Class A (LU.US) Wednesday pre-market: Lowe's Companies, Inc. (LOW.US), Target Corporation (TGT.US), Analog Devices, Inc. (ADI.US), TJX Companies (TJX.US), Full Truck Alliance Co. Ltd. Sponsored ADR (YMM.US), KINGSOFT CLOUD (KC.US), Weibo Corp. Sponsored ADR Class A (WB.US)