Preview of US Stock Market | U.S. stock index futures mixed as chip and optical communication stocks fall broadly in premarket trading; key U.S. September CPI data looms

Premarket Market Moves 1. On Wednesday, October 14, in premarket trading, the three major U.S. stock index futures were mixed. As of press time, Dow futures rose 0.32%, S&P 500 futures rose 0.19%, and Nasdaq futures fell 0.10%. 2. As of press time, Germany's DAX index rose 0.60%, the UK's FTSE 100 index rose 0.31%, France's CAC 40 index rose 0.53%, and the Euro Stoxx 50 index rose 0.47%. 3. As of press time, WTI crude oil rose 1.40% to $95.46 per barrel. Brent crude oil rose 0.62% to $106.34 per barrel. Market News U.S. September CPI preview: High oil prices are expected to lift headline inflation, while moderate core inflation may ease the urgency for rate hikes. The U.S. Department of Labor will release the Consumer Price Index (CPI) report at 20:30 Beijing time on Wednesday. Economists say September CPI is expected to rise 0.6% month over month, compared with a 0.4% increase in August; September CPI is expected to rise 3.6% year over year, above the 3.4% increase in August. However, excluding volatile food and energy, September CPI is expected to rise 0.2% month over month, compared with a 0.3% increase in August. If the September CPI data show that prices for other goods rise moderately after excluding volatile food and energy prices, that would further reduce the urgency for the Federal Reserve to raise rates again this month. Some economists said more expensive energy products have not yet been embedded in inflation. But others warned that record-high diesel prices and no sign of an end to the Middle East conflict will soon pass through to supermarket prices. Dalio sounds the alarm again: The U.S. Treasury bear market has "a long way to go"! Legendary U.S. investor and Bridgewater founder Ray Dalio once again warned global stock and bond markets that surging government and corporate financing worldwide may further weaken the willingness of traditional large buyers to absorb supply, while rising yields and tightening paths by the Federal Reserve and other central banks will further expand debt-servicing burdens, creating a self-reinforcing debt-cycle dilemma. A forecast released by Dalio shows that, measured by total debt and bond-servicing costs relative to government revenue, the U.S. debt burden has reached its highest level since World War II and will worsen further in the coming years. Facing U.S. Treasury assets whose yield indicators continue to surge, Dalio directly warned that the bear-market-like decline in the U.S. Treasury market "may have a long way to go." Is a U.S. Treasury yield shock to 6% not alarmist? The "Wall Street big brother" reminds investors to prepare in advance. The U.S. 10-year Treasury yield recently broke above 5%, fueling discussion over whether the next stop will be 6%. JPMorgan CEO Dimon said he is not predicting that yields will definitely rise to 6%, but investors and borrowers need to prepare for that possibility. Dimon pointed out that if the 10-year U.S. Treasury yield rises another 1 percentage point from the 5% level reached in September, the impact could exceed that caused by the cumulative 1 percentage point rise in yields over the six months after the Iran war broke out at the end of February. At the same time, however, a 6% yield is becoming a potential threshold for investors assessing asset allocation. The latest global fund manager survey by Bank of America Corp showed that 37% of respondents said they would consider switching from stocks to bonds if the 10-year U.S. Treasury yield reached 6%; another 14% set their threshold for switching to bonds at 6.5%, while 19% believed current yields were already enough to prompt them to adjust allocations. A "Wall Street veteran" who once warned of financial crises sounds a bubble alarm: U.S. stock valuations, leverage, and positioning are at the most extreme levels in his 40-year career. David Rosenberg said the U.S. stock market increasingly resembles a bubble, with valuations, leverage, and investor positioning all at extreme levels unseen in his 40 years in the industry. He believes the current bull market depends far more on the direction of artificial intelligence (AI) progress than the stock market's dependence on the tech sector before the dot-com bubble formed. In addition to warning about the market's reliance on AI for further gains, Rosenberg also pointed out vulnerabilities in U.S. economic fundamentals. He especially noted that consumers are increasingly dependent on further stock market gains to fund their lifestyles. Standard Chartered: Oil flows through Hormuz are far from returning to normal, and the market underestimates transportation risks. Gulf crude exports have recently recovered noticeably, but Standard Chartered warned that the oil transportation system through the Strait of Hormuz is still far from truly returning to normal. Standard Chartered's energy research team believes the market is currently confusing two concepts: a recovery in export volumes does not equal a recovery in the transportation system. Although oil-producing countries such as Saudi Arabia and the UAE have maintained supply through alternative routes, ship-to-ship transfers, and increased naval escorts, these measures are more costly, less efficient, and more vulnerable to new attacks. Standard Chartered estimates that September Gulf crude and condensate exports (excluding Iran and including alternative routes such as Fujairah and the Red Sea) were about 16.5 million barrels per day, already close to pre-conflict levels. But only about 60% of that crude was transported through the Strait of Hormuz. Before the conflict, that proportion was about 83%. This means a large share of transportation flows that originally relied on Hormuz is being completed through more complex alternative methods. Individual Stock News U.S. chip stocks and optical communication stocks fell broadly in premarket trading. On Wednesday in premarket trading, as of press time, SK Hynix (SKHY.US) fell more than 3%, SanDisk (SNDK.US) fell more than 2%, Western Digital Corporation (WDC.US) fell nearly 2%, and Seagate Technology Holdings PLC (STX.US), Micron Technology, Inc. (MU.US), Intel Corporation (INTC.US), and AMD (AMD.US) all fell more than 1%, while Qualcomm (QCOM.US), Broadcom Inc. (AVGO.US), and NVIDIA Corporation (NVDA.US) fell less than 1%; among optical communication stocks, Credo Technology (CRDO.US) fell more than 2%, Coherent (COHR.US) and Marvell Technology, Inc. (MRVL.US) fell nearly 2%, and Astera Labs (ALAB.US) and Corning Inc (GLW.US) fell more than 1%. ASML Holding NV ADR (ASML.US) Q3 net profit beat expectations and the company raised guidance for a third consecutive time, saying supply in 2027-2028 will still struggle to meet demand. The earnings report showed that the company achieved total net sales of 11.662 billion euros in the quarter, up 55.2% year over year and up 25.0% quarter over quarter, slightly below the market expectation of 11.735 billion euros; but net profit reached 4.960 billion euros, up 133.4% year over year, significantly exceeding the market expectation of 4.165 billion euros. The sharp expectation gap between profitability and revenue became one of the most closely watched features of this quarter's earnings report. From a business structure perspective, the core driver of the profit beat came from installed base management. This business generated sales of 3.289 billion euros in the quarter, above the previous guidance of about 2.9 billion euros, mainly driven by strong demand for productivity upgrades. Because this business has a significantly higher margin than new equipment sales, its better-than-expected performance directly pushed the company's gross margin up to 57.5%, exceeding the upper end of the guidance range and the market expectation of 56.1%. The company also acknowledged that, based on current capacity plans, supply in 2027 and 2028 is expected to be unable to fully meet customer demand, and it is studying increasing the 2028 capacity increase to more than the previously announced 30%. On full-year guidance, the company narrowed its net sales range from the previous 43 billion to 45 billion euros and raised the lower end to 44 billion to 45 billion euros, and raised its full-year gross margin forecast from 54% to 56% to about 56%. This is already the third consecutive quarter that ASML Holding NV ADR has raised its full-year business outlook. An anti-money-laundering fine hit profits hard, and Bank of America (BAC.US) Q3 earnings fell 17% and missed expectations. The earnings report showed that Bank of America Corp Q3 revenue was $30 billion, but that missed the market expectation of $30.7 billion; net profit was $6.9 billion, compared with $8.3 billion a year earlier, down 17% year over year. The decline in net profit was mainly due to about $1.2 billion (about $0.17 per share) in regulatory settlement expenses recorded in the third quarter. Excluding the $1.2 billion in regulatory settlement expenses, adjusted net profit was $8.1 billion; adjusted earnings per share were $1.08, below the market expectation of $1.11. Net interest income was $16.4 billion, up 8% year over year; provision for credit losses was $1.3 billion, basically flat from a year earlier. By business segment, global wealth and investment management revenue was $7.1 billion, up 13% year over year; consumer banking revenue was $11.6 billion, up 4% year over year; global banking revenue was $6.2 billion, basically flat; global markets revenue was $5.9 billion, down 6% year over year. As of press time, Bank of America Corp fell nearly 4% in Wednesday premarket trading. BlackRock, Inc. (BLK.US) Q3 results beat expectations, with assets under management up 15% year over year to a record high. BlackRock, Inc. Q3 revenue was $7.752 billion, up 19% year over year, above the market expectation of $7.4 billion to $7.52 billion. On profitability, adjusted earnings per share were $15.93, up 38% year over year and more than 11% above the market expectation range of $14.10 to $14.32; adjusted operating income was $3.330 billion, up 27% year over year; adjusted operating margin was 47.8%, up 320 basis points from the same period last year. Scale and fund flows were the biggest highlights of the quarter. As of September 30, the company's assets under management (AUM) reached a record $15.49 trillion, up 15% year over year; third-quarter net inflows were $205 billion. As of press time, BlackRock, Inc. rose nearly 4% in Wednesday premarket trading. Winning a 100,000-unit drone battery order, Enovix (ENVX.US) surged in premarket trading. U.S. lithium-ion battery developer and manufacturer Enovix said it has received an initial purchase order for 100,000 battery units from an unnamed multinational drone systems supplier, with deliveries planned for the first half of next year. The customer is gradually expanding its use of Enovix cells. Enovix said that after successful initial deployment, the customer is expected to place additional orders for the project in the second half of 2027 and beyond. Enovix said this latest order means one of the previously disclosed $216 million in potential project pipeline has officially converted into a confirmed order awaiting delivery, and the company expects more pipeline projects to convert into substantive purchase orders in the coming quarters. As of press time, Enovix rose more than 9% in Wednesday premarket trading. Key Economic Data and Event Preview 20:30 Beijing time: U.S. September CPI data 01:30 Beijing time the next day: 2027 FOMC voter and Richmond Fed President Barkin participates in a fireside chat 02:00 Beijing time the next day: The Federal Reserve releases the Beige Book on economic conditions Earnings Preview Thursday premarket: Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR (TSM.US), Charles Schwab Corp (SCHW.US), Telefonaktiebolaget LM Ericsson Sponsored ADR Class B (ERIC.US)