Preview of US Stock Market | All three major stock index futures are rising together, memory chip stocks are climbing, and SK Hynix will release its earnings after the bell.

Pre-market Market Moves 1. On Tuesday, October 27, ahead of the U.S. market open, all three major U.S. stock index futures rose together. As of press time, Dow futures were up 0.28%, S&P 500 futures were up 0.37%, and Nasdaq futures were up 0.55%. 2. As of press time, Germany's DAX index was up 0.37%, the UK's FTSE 100 was down 0.59%, France's CAC 40 was up 0.50%, and the Euro Stoxx 50 was up 0.37%. 3. As of press time, WTI crude oil was down 0.93% at $100.81 per barrel. Brent crude was down 0.82% at $109.83 per barrel. Market News Fed Expected to Hold Steady This Week, Morgan Stanley Warns: 75 to 100 Basis Points of Hikes Still Possible Ahead. The Federal Reserve will announce its October interest rate decision on Wednesday U.S. Eastern Time. The market widely expects the Fed to keep rates unchanged at that time. Morgan Stanley Chief U.S. Economist Michael Gapen agrees with the market's judgment. He said the Fed will hold steady in October, but the market should still expect policy rates to rise later. Gapen believes the Fed will adopt a wait-and-see attitude, saying it will observe underlying trends to assess the eventual direction of policy. The Fed may argue that it will judge for itself whether financial conditions are tight enough and then decide its policy path accordingly. Either path carries risks for the Fed, but a "more gradual pace" is more likely. The economist also believes the Middle East war and rising oil prices will pose risks to inflation, adding that Morgan Stanley is "incorporating some of the impact into next year's inflation forecast," and that the Federal Open Market Committee (FOMC) may also consider this. Gapen said: "I think the economy can withstand a total of 75 to 100 basis points of rate hikes without causing huge concerns about yields." But he warned that if the Fed needs a total of six to seven hikes to return to 2023 levels, that could trigger some concerns. Morgan Stanley Declares U.S. Stock Correction Nearing Its End! Sticks to Year-End S&P 8000 Target, Identifies Three Counteroffensive Catalysts. Morgan Stanley Chief U.S. Equity Strategist Michael Wilson concluded in his latest research report that the internal correction in U.S. stocks that began in June has entered its final tail phase, though the index may still experience one last leg down. Wilson said the digestion of three key uncertaintiesAI-related capital issues, midterm election uncertainty, and changes in Fed liquidityis expected to help the market form a bottom, laying a major foundation for the S&P 500 to rebound to a record level near 8000 by year-end. Morgan Stanley's composite sentiment indicator is currently at a neutral level, and third-quarter earnings are expected to grow 27% year over year. Based on this, Wilson maintains his judgment: as these key uncertainties gradually become clearer in the coming weeks, attractive buying opportunities should emerge in the market. Risk Appetite Falls Below ZeroHas the Window to Add to Stocks Finally Opened? Amid the Semiconductor Rebound, Goldman Sachs Group, Inc. Sticks With "Overweight" Equities. Goldman Sachs Group, Inc.'s latest "GOAL Kickstart" research report, which focuses on financial market risk appetite and equity-bond allocation stance, shows that the tech-led risk repricing has significantly reduced market crowding, but credit pressure has not yet been lifted; earnings support, lower valuations, and reduced positioning remain sufficient to support the Goldman Sachs Group, Inc. financial market strategist team's "moderately pro-risk" asset allocation stance, which leans toward optimistic forecasts for equities and government bonds. The report places Goldman Sachs Group, Inc.'s proprietary risk appetite indicator, which fell to -0.5, the decline in credit excess returns, the rebound in major government bonds, pressure on European assets, and the leadership of quality and defensive styles within the same cross-asset framework, cross-validated by valuations, earnings revisions, fund flows, volatility, liquidity, and recession models. As a result, Goldman Sachs Group, Inc. maintains the "overweight" bullish rating on equities over 3-month and 12-month horizons that it issued not long ago. Citadel Warns: Tech Selloff Is Just the First Alarm Bell, AI Trade Has "Almost No Margin for Error." Noshad Shah, head of EMEA fixed income sales at Citadel, said the selloff in tech stocks shows investors are becoming increasingly demanding about whether massive AI spending will ultimately generate sufficient profits. "Given how much of the current economy and stock market is betting on the AI trade, there is almost no margin for error once other risks begin to emerge." Shah said tariffs, fiscal stimulus, and elevated energy prices have made both the financing and operating costs of AI investment more expensive, while public opposition to data center construction could slow project timelines and push up costs. He added that the U.S. has so far been able to absorb these pressures because earnings and confidence remain strong. But a sustained retreat in AI investment and financing could threaten the household wealth that had helped buffer the economy against higher costs. JPMorgan Asset Management CIO: U.S. Bonds Could Return 7%-8% Over the Next 12 Months, Long End Offers More Value. Bob Michele, Chief Investment Officer and Global Head of Fixed Income at JPMorgan Asset Management, said the U.S. bond market is expected to deliver returns of about 7% to 8% over the next 12 months. He also believes the long end of the U.S. Treasury yield curve offers the most value. Michele said, "The U.S. Treasury yield curve is close to 5%," with front-end yields slightly below that level, "so we first expect some price appreciation. After that, you also get carry." He believes the long end of the U.S. Treasury yield curve offers the most value. Since the start of this month, U.S. Treasury prices have risen overall. A mix of factorsthe selloff in AI-related stocks, the French crisis, and persistent tensions in the Middle Easthas made U.S. government bonds the preferred safe-haven asset for global investors. The benchmark 10-year U.S. Treasury yield has fallen by more than 30 basis points since the start of October, on track to end a seven-month streak of increases. Individual Stock News Anthropic (ANT.US) Officially Files Prospectus, Sprinting Toward the Largest IPO in History. Anthropic publicly submitted its S-1 filing to the SEC on Monday, planning to list on Nasdaq under the ticker "ANT." The company plans to complete its IPO in the week of November 16. Market expectations for Anthropic's valuation range from $1.5 trillion to $2 trillion, with the offering size potentially reaching as much as $100 billion or more, which would set a record for the largest IPO in global history. The S-1 filing shows that Anthropic generated revenue of about $16.3 billion in the first half of this year, exceeding full-year 2025 revenue of $4.6 billion. But at the same time, the company's net loss during the same period reached as high as $80.7 billion, of which about $72.4 billion came from accounting charges related to fair value changes in instruments such as convertible bonds. Operating cash flow has turned positive at $3.93 billion. Computing power investment is the biggest highlight: first-half computing power spending was nearly $9 billion, and the company has committed $518 billion in future infrastructure spending, including at least $110 billion to Amazon.com, Inc. and at least $114.5 billion to Alphabet Inc. Class C. Analysts believe this prospectus will serve as a "trailer" for this week's earnings from Alphabet Inc. Class C, Microsoft Corporation, and Amazon.com, Inc.the demand from Anthropic can be glimpsed in all three companies' cloud revenue. Memory Chip Stocks Rise Broadly Pre-Market; SK Hynix (SKHY.US) Reportedly Plans Record-Scale Shareholder Returns. On Tuesday ahead of the U.S. market open, as of press time, SK Hynix rose more than 3%, Micron Technology, Inc. (MU.US) and Seagate Technology Holdings PLC (STX.US) rose more than 2%, SanDisk (SNDK.US) rose nearly 2%, and Western Digital Corporation (WDC.US) rose more than 1%. On the news front, SK Hynix will release its third-quarter 2026 earnings after the U.S. market close on Tuesday. After months of adjustment in AI-related assets, this earnings report will also serve as the latest window for the market to test the strength of high-bandwidth memory (HBM) and the sustainability of AI infrastructure demand. In addition, according to reports, SK Hynix plans to announce an additional shareholder return plan of KRW 50 trillion to KRW 60 trillion (about $38 billion to $45 billion) on the same day as its third-quarter results. Combined with the recently completed KRW 40 trillion treasury share buyback and cancellation, the company's total shareholder returns this year will reach KRW 90 trillion to KRW 100 trillion, a record high and about seven times last year's level. Microsoft Corporation (MSFT.US) Offers Voluntary Buyouts to About 60,000 Employees: Covering More Than a Quarter of Global Workforce, Squeezing Costs to Free Up Room for AI Capex. Microsoft Corporation is offering voluntary departure (buyout) packages to about 60,000 employees. This is the broadest of a series of team adjustments at Microsoft Corporation since 2026 and marks the company's more intensive effort to cut labor costs and reallocate resources as it continues to ramp up investment in artificial intelligence. The number exceeds a quarter of its total global workforce. People familiar with the matter said entire departments including Xbox, Windows, Copilot, and finance are included in this plan; some positions related to data centers, sales, marketing, cybersecurity, and quantum computing are not eligible. This boundary arrangement indicates that while Microsoft Corporation is "slimming down," it is focused on protecting teams directly related to AI infrastructure and core growth engines. Selling Chips, Doing Leasing, Providing Residual Value Support: Broadcom Inc. (AVGO.US) Teams Up With Four Wall Street Giants on $63 Billion Financing to Fund Anthropic's Chip Purchases. Broadcom Inc. and four major Wall Street financial giantsBank of America Corp, Blackstone Inc., Citigroup, and Morgan Stanleyhave jointly arranged a financing transaction of about $63 billion to provide major financing support for Anthropic, the world's top AI large-model developer/AI application leader, to purchase AI chips. The participating institutions said in a joint statement that the transaction will be implemented through a newly established special purpose vehicle, with committed financing provided by the above Financial Institutions, Inc. to purchase Broadcom Inc. chips and lease them to Anthropic. Broadcom Inc. is guaranteeing part of the financing through an arrangement known as "residual value support." The financing took shape over several weeks and has been closely watched by Wall Street and Silicon Valley professionals. With opposition to data centers growing and the market worried about future demand, they hope to confirm from it that investors remain willing to support AI infrastructure construction. Corning Inc (GLW.US) Q3 Results and Q4 Guidance Both Beat Expectations. The earnings report shows Corning Inc's Q3 sales rose 19% year over year to $5.081 billion, slightly better than the market expectation of $5.028 billion; core earnings per share were $0.91, better than the market expectation of $0.88 and up nearly 36% year over year. Among them, optical communications segment sales rose 44% year over year to $2.38 billion. On guidance, Corning Inc expects fourth-quarter core earnings per share of $0.96 to $1.00, versus the market estimate of $0.93; core sales of $5.2 billion to $5.3 billion, versus the market estimate of $5.2 billion. As of press time, Corning Inc rose more than 2% in Tuesday's U.S. pre-market session. Coca-Cola Company (KO.US) Q3 Revenue and EPS Beat Expectations, Raises Full-Year Profit Guidance. Coca-Cola Company's third-quarter net revenue rose 7% to $13.4 billion, better than the market expectation of $12.92 billion. Organic revenue grew 7%, driven by a 5% increase in unit case volume and a 1% positive contribution from price/product mix. Operating profit rose 12% to $4.5 billion, with the operating margin expanding from 32.0% to 33.4%. Earnings per share rose 8% to $0.93; comparable earnings per share rose 11% to $0.91, better than the market expectation of $0.88. Coca-Cola Company raised its full-year 2026 guidance: organic revenue growth of at least 5%, comparable earnings per share growth of at least 11% (previously expected to grow 9%-10%), and free cash flow of at least $13 billion. Chief Executive Officer Henrique Braun said the company's momentum continues and he is confident in the updated guidance. PayPal (PYPL.US) Q3 Revenue Misses Expectations, Raises Full-Year Profit Guidance. The earnings report shows PayPal Q3 revenue was $8.6 billion, up 2.4% year over year, below market expectations; Non-GAAP earnings per share were $1.45, beating market expectations. Transaction expenses for the quarter were $4.248 billion, up from $4.063 billion a year earlier; transaction and credit losses were $386 million, significantly narrower than $483 million a year earlier, indicating an improvement in credit quality. The company raised its full-year adjusted profit guidance, signaling progress in its business transformation. PayPal raised its full-year 2026 Non-GAAP earnings per share guidance to $5.60, above the market expectation of $5.39; it also provided fourth-quarter EPS guidance of $1.43, also above the market expectation of $1.35. As of press time, PayPal fell nearly 2% in Tuesday's U.S. pre-market session. Strong AI Chip Design Demand! Cadence Design Systems (CDNS.US) Q3 Revenue Up 22% Year Over Year, Raises Full-Year Guidance. The earnings report shows Cadence Design Systems' Q3 revenue reached $1.633 billion, up 22% year over year; non-GAAP adjusted earnings per share were $2.11, up from $1.93 a year earlier. Driven by AI-powered chip design demand, all of the company's major businesses achieved double-digit revenue growth. Among them, core electronic design automation (EDA) segment revenue rose 20% year over year, mainly due to broad portfolio growth and increased adoption by memory chip and hyperscale data center customers. The company also won 16 new full-flow digital design and signoff projects during the quarter. Intellectual property (IP) segment revenue rose 24% year over year, benefiting from strong demand for interface, memory, and foundation IP products, as well as continued cooperation with major cloud computing companies, semiconductor companies, and foundries. Looking ahead to full-year 2026, Cadence Design Systems raised its performance expectations, forecasting full-year revenue of $6.387 billion to $6.417 billion, corresponding to a midpoint of about $6.402 billion, or about 21% year-over-year growth. As of press time, Cadence Design Systems rose more than 3% in Tuesday's U.S. pre-market session. United Parcel Service (UPS.US) Raises Full-Year Revenue Guidance, Signaling Strong Holiday Season Demand. The earnings report shows United Parcel Service's Q3 revenue rose 6.7% year over year to $22.85 billion, above the market expectation of $22.29 billion. Revenue growth this quarter came almost entirely from pricing rather than volume. On profitability, GAAP operating profit was $1.74 billion and diluted earnings per share were $1.37, down 3.3% and 11.6% year over year, respectively; adjusted diluted earnings per share were $1.69, above the market expectation of $1.63. The company also raised its fourth-quarter and full-year guidance, the second consecutive quarter of increases, showing that the delivery giant expects to benefit from high prices and resilient demand during the holiday season. The company expects full-year revenue of about $92.6 billion (previous value $91.2 billion), adjusted operating profit of about $8.75 billion, adjusted earnings per share of about $7.28, and raised its adjusted free cash flow target to about $6.1 billion from about $5.5 billion. Novartis AG Sponsored ADR (NVS.US) Q3 Revenue Up 4% Year Over Year, Long-End Pipeline Impairment Weighs on Net Profit. The earnings report shows Novartis AG Sponsored ADR's Q3 net sales were $14.522 billion, up 4% year over year (also up 4% at constant currencies), missing market expectations; core operating profit was $6.036 billion, up 11% year over year; core earnings per share were $2.46, up 9% year over year, beating market expectations. The core operating margin was 41.6%, up 2.3 percentage points year over year, mainly due to sales growth. IFRS operating profit was $1.843 billion, down 59% year over year, with an operating margin of 12.7%, down 19.7 percentage points. The main drags included: R&D expenses rose to $5.150 billion (+75%) due to a $1.9 billion partial impairment of the del-desiran IPR&D asset obtained from the Avidity acquisition; other expenses rose to $1.575 billion due to provisions related to long-term supply agreements and increased restructuring costs. The impairment stems from the Phase III HARBOR study in the DM1 indication announced in September 2026 failing to meet its primary endpoint, reducing the asset's carrying value to $5.5 billion. Key Economic Data and Event Preview 22:00 Beijing Time: U.S. October Conference Board Consumer Confidence Index Earnings Preview Wednesday morning: Visa (V.US), Seagate Technology Holdings PLC (STX.US), Robinhood (HOOD.US), NXP Semiconductors NV (NXPI.US) Wednesday pre-market: UBS Group AG (UBS.US), Deutsche Bank (DB.US), Nomura (NMR.US), New Oriental Education & Technology Group, Inc. Sponsored ADR (EDU.US), GE Vernova (GEV.US), Amphenol (APH.US), Automatic Data Processing, Inc. (ADP.US)