Preview of US Stock Market | The three major stock index futures were mixed. Moderna soared before the market opened. The Federal Reserve's July meeting minutes and the auction of 20-year U.S. Treasury bonds are set to be released tonight.

Pre-Market Market Trends 1. As of August 19 (Wednesday) pre-market, U.S. stock index futures showed mixed movements. As of the time of writing, Dow futures were up 0.13%, S&P 500 futures were up 0.05%, while Nasdaq futures were down 0.21%. 2. As of the time of writing, the German DAX index was down 0.21%, the UK FTSE 100 index was down 0.01%, the French CAC 40 index was up 0.37%, and the Euro Stoxx 50 index was up 0.08%. 3. As of the time of writing, WTI crude oil was up 0.71%, trading at $84.66 per barrel. Brent crude oil was up 0.63%, trading at $91.59 per barrel. Market News What Walsh didnt say, the Federal Reserves meeting minutes will make up for tonight! At 2:00 AM Beijing time on Thursday, the Federal Reserve will release the minutes from the July meeting. Traders are looking to the document for more clues to gauge the true outlook within the central bank on future interest rate paths and inflation risks. The significance of this meeting's minutes is higher than usual due to the Fed's recent reduction in public policy guidance. During the July meeting, the Federal Reserve maintained the federal funds rate target range at 3.5% to 3.75% for the fifth consecutive time, but three of the 12 voting members expressed dissent in favor of a rate hike. Chair Jerome Powells statements during the press conference were relatively brief and did not explain in detail how the committee weighed inflation, economic growth, and future policy risks. This situation has made the market more reliant on the minutes of the meeting to understand the policy discussions that were not disclosed publicly. The market is particularly focused on whether there is a clearer inclination towards rate hikes forming within the monetary policy committee. If the minutes release stronger hawkish signals, U.S. Treasury yields may rise further, supporting the dollar and applying pressure to interest-rate-sensitive stocks; if the minutes indicate that significant divisions still exist within the committee, sectors of stocks that have been under pressure due to rising financing costs may find some relief. A $16 billion 20-year Treasury auction is on the horizon; will the yield hit a new high? On Wednesday local time, the U.S. Department of the Treasury will issue $20 billion in 20-year Treasury bonds, of which about $16 billion is the issuance of new bonds for investors. As long-term U.S. Treasury yields have been rising recently, this auction will serve as an important window for the market to observe investors views on the U.S. fiscal situation and the ability to absorb debt supply. As of the time of writing, the yield on the 20-year Treasury bonds was 5.266%. The key question the market is focused on is how high interest rates will need to rise in order to continue attracting global capital to purchase U.S. Treasury bonds as U.S. government borrowing needs continue to expand. In the past week, the U.S. Treasury market has already signaled this. The bid yield for the 10-year Treasury bonds issued by the U.S. Treasury reached 4.683%, the highest level in 19 years; the bid yield for the 30-year Treasury auction reached 5.216%, the highest level in 25 years. The continued rise in long-term bond yields indicates that investors are demanding higher returns to compensate for uncertainties brought by the expanding U.S. fiscal deficit and potential future inflation risks. J.P. Morgan Asset Management warns: AI concentration risk is spreading to the bond market; investors need to be wary of "crowded trades." J.P. Morgan Asset Management strategist Gabriela Santos warned that the concentration risk of "AI factors" has spread from the stock market to the fixed income sector. Although the rhetoric around a "supercycle" still holds, the necessity for investors to act cautiously is sharply increasing. Santos stated, "You can be very bullish on everything related to AI, but you still need to think very carefully about portfolio construction." Santos' warning about concentration extends to bond portfolios. She noted that the issuance of investment-grade bonds has reached historic highs for the fourth consecutive month, with companies including Alphabet Inc. Class C even issuing 100-year bonds. Additionally, multi-asset investors are now facing risk exposure related to AI expansion on both the equity and fixed income sides. BTIG: When the "music" stops, the U.S. stock market's game of musical chairs could end at any time. The U.S. stock market is experiencing an unprecedented structural split. Price movements have diverged from market breadth, with capital rotating between different factors in a seemingly random manner. Once the music stops in this "musical chairs game," investors will face a long-overdue, comprehensive high-correlation sell-off. Market breadth is one of the core indicators of market health. BTIG technical strategist Jonathan Krinsky noted in a report on Wednesday that to date, there have been 57 trading days in 2026 where price movements contradicted market breadth trends, tying with the past two years for the most over nearly 30 yearsand its only mid-August, so this record will surely be further broken within the year. Krinsky warned, "We are closer to that day than many people expect"when there are no more chairs left in the market, investors will be forced to turn to cash, triggering a synchronized sell-off that hasnt occurred for ten months. Although long-term U.S. Treasury yields remain high, interest rate options have now shifted: rate cut trades are emerging. With a series of recent weak economic data from the U.S., bond traders are quickly adjusting their outlook on the Fed's policy path. Despite long-term Treasury yields being at multi-year highs, the interest rate options market has begun to shift towards betting that the Federal Reserve will cut rates in 2027 to hedge against the risk of an economic slowdown. This change began with last week's release of a series of economic data showing that both U.S. inflation and consumer demand slowed in July. Subsequent non-farm payroll figures revealed that the U.S. economy unexpectedly lost 23,000 jobs in July; retail sales recorded the largest drop in over a year, and consumer confidence similarly weakened. As a result, market expectations for a rate hike at the Federal Reserve's meeting on September 16 have lowered significantly. Options traders are beginning to establish new positions, betting that the extent of future rate hikes reflected in the swap market will be revised, with some investors even beginning to hedge for potential rate cuts before mid-2027. Legendary investor bets on a U.S. recession next year: Rising inflation may burst U.S. stock valuations. Billionaire investor, Omega Advisors CEO, and former Goldman Sachs Group, Inc. CEO Leon Cooperman issued another warning about the U.S. economy and stock market this week. He projected that the U.S. economy may slip into recession within the next year, potentially dragging down the stock market. Cooperman indicated that the current market has similarities to historical boom-bust cycles, including the crash of the "Nifty Fifty" stocks in the early 1970s. He believes that optimism regarding AI investments may also begin to wane, stating, I think we will see a recession at some point next year, which could lead to a market downturn. Cooperman further argued that investors are overlooking the risk of inflation warming up again, which might also impact stock valuations. His views significantly diverge from Wall Street's mainstream consensus. Most market forecasters remain optimistic about AI demand and related investment returns, with the Nasdaq 100 index climbing 19% so far this year, poised to achieve double-digit gains for the second consecutive year. Individual Stock News SK Hynix (SKHY.US) rises pre-market, plans to repurchase and cancel 40 trillion KRW in stocks. SK Hynix announced on Wednesday that it will repurchase and cancel shares worth 40 trillion KRW (approximately $28.61 billion). The company stated that the stock repurchase will start on August 20 and last for about three months, with all purchased shares being canceled after the completion of the buyback. This plan, amounting to 40 trillion KRW, represents the largest share buyback and cancellation transaction in the history of South Korean listed companies. Furthermore, SK Hynix clearly stated it would raise the scale of shareholder returns from the previous "within 50% of cumulative free cash flow" to "over 50%." The shareholder return methods will include a combination of stock buybacks and cash dividends, with the company also planning to review the expansion of its dividend policy, including fixed and special dividends. As of the time of writing, SK Hynix's U.S. stock was up over 3% pre-market on Wednesday. Moderna (MRNA.US) soars pre-market after successful Phase III trial of mRNA melanoma vaccine. Moderna and Merck & Co., Inc. (MRK.US) announced on Wednesday that their jointly developed mRNA personalized cancer vaccine, intismeran autogene, achieved preliminary positive results from its first Phase III clinical trial. This marks the first successful Phase III trial case for mRNA technology in cancer treatment and a major breakthrough in personalized immunotherapy history. According to a joint statement from the two companies, the INTerpath-001 Phase III trial met its primary and key secondary endpointsshowing that the vaccine in combination with Merck & Co., Inc.s immune drug Keytruda significantly reduces the risk of postoperative recurrence in melanoma patients and effectively inhibits the tumor from spreading to distant organs. This is the first clinical protocol proven to be more effective than Keytruda alone in adjuvant therapy for melanoma, with Keytruda previously being the standard treatment choice for this indication. Modernas CEO Stphane Bancel stated that the product could be approved for market as early as 2027, depending on the regulatory review process. He referred to the results as an extraordinary milestone for mRNA science. As of the time of writing, Moderna soared over 95% pre-market on Wednesday, while Merck & Co., Inc. was up over 8%. Alphabet Inc. Class C (GOOGL.US) raises $3.9 billion through its first Australian dollar bond issuance, adding to the wave of financing among global tech companies. The U.S. tech giant Alphabet Inc. Class C successfully raised A$5.5 billion (approximately $3.89 billion) through its inaugural Australian dollar bond issuance. The terms list shows that this issuance covers four types of maturities: 3-year, 5-year, 10-year, and 20-year bonds, with the longest 20-year bond having a coupon rate set at 6.9%. This marks Alphabet Inc. Class C's first foray into the Australian dollar bond market, with long-term bond financing costs nearing 7%, possibly setting a record for the highest coupon rate in the company's history. This bond issuance follows Alphabet Inc. Class C's earlier completion of a $25 billion U.S. bond issuance this month. Global tech companies are increasingly turning to the capital markets to raise funds for their vast AI investments, whereas they previously relied on their own cash reserves for investment. Target Corporation (TGT.US) Q2 earnings beat expectations, raises annual guidance. The earnings report shows that Target Corporation's Q2 total net sales were $26.54 billion, better than the market expectation of $26.14 billion; net sales grew 5.3% year-on-year to $25.95 billion; same-store sales increased by 3.8%, mainly driven by a 3.6% increase in foot traffic. Adjusted earnings per share stood at $2.46, exceeding the market expectation of $2.33. Based on stronger-than-expected performance in the first half of the year, Target Corporation raised its full-year forecasts for fiscal 2026: it now expects net sales to grow by about 5% (previous guidance was 1 percentage point higher); operating profit margin is expected to reach around 6% (including about 90 basis points contributed by tariff refunds). GAAP and adjusted EPS guidance has been raised to between $9.90 and $10.90. Lowe's Companies, Inc. (LOW.US) Q2 results mixed, full-year guidance below expectations. The earnings report shows that Lowe's Companies, Inc. Q2 sales grew by 8% year-on-year to $26 billion, below the market expectation of $26.1 billion; adjusted earnings per share were $4.40, better than the market expectation of $4.22. Moreover, the company stated that it expects full-year earnings and revenue to fall within the lower end of its previous forecast range. The company now expects revenues for the fiscal year ending January 2027 to be $92 billion and adjusted earnings per share to be $12.25, both below the market expectations of $92.9 billion and $12.43. This performance further exacerbates the pressures on Lowe's Companies, Inc.'s stock price. The U.S. real estate market is recovering, but high prices have already put pressure on home renovation spending for 2026. As of the time of writing, Lowe's Companies, Inc. was down over 3% pre-market on Wednesday. Keysight Technologies Inc. (KEYS.US) Q3 earnings and guidance both exceed expectations: AI data center demand drives a 56% year-on-year surge in orders. Benefiting from the rapid expansion of AI data centers driving demand for its software and testing tools, electronic design, simulation, and testing equipment supplier Keysight Technologies Inc. reported Q3 adjusted earnings per share and revenue both exceeding market expectations, and has raised guidance for Q4 and the full year. The earnings report shows that the company achieved revenue of $1.85 billion in Q3, a 36.5% increase year-on-year, higher than the analyst expectation of $1.75 billion; adjusted earnings per share were $3.07, far exceeding the expected $2.48. Q3 order volume reached $2.09 billion, an increase of 56% year-on-year, with core orders up 52%, also significantly surpassing the market expectation of $1.86 billion. Looking ahead, the company expects adjusted earnings per share for Q4 to be between $3.34 and $3.40, and revenue to be between $1.93 billion and $1.95 billion, with midpoints of $3.37 (approximately 76% year-on-year growth) and $1.94 billion (approximately 37% year-on-year growth), significantly above the market expectations of $2.68 and $1.83 billion. Important Economic Data and Event Forecasts On the next day at 2:00 AM Beijing time, the Federal Reserve will publish the monetary policy meeting minutes. Earnings Forecasts Pre-market Thursday: Walmart Inc. (WMT.US), Alibaba Group Holding Limited Sponsored ADR (BABA.US), NTES (NTES.US), Youdao Inc. ADR Class A (DAO.US), Futu (FUTU.US), Autohome Inc. Sponsored ADR Class A (ATHM.US), Daqo New Energy Corp Sponsored ADR (DQ.US), Newbridge Bio (NBP.US).