Pre-market market trends

1. On October 9 (Wednesday), the futures of the three major US stock indexes fell sharply before the US stock market. As of press release, Dow futures were down 0.06%, S&P 500 futures were down 0.05%, and NASDAQ futures were down 0.13%.

2. As of press release, the German DAX index rose 0.27%, the British FTSE 100 index rose 0.25%, the French CAC40 index rose 0.28%, and the European Stoxx 50 index rose 0.11%.

3. As of press release, WTI crude oil fell 0.65% to $73.09 per barrel. Brent crude oil fell 0.57% to $76.74 per barrel.

Market news

Bank of America: The Q3 earnings season kicks off, and investors will enjoy a “stock selection paradise”. Bank of America said that the third quarter will be an “excellent environment” for stock selectors, and the performance of S&P 500 constituent stocks will drive the index to reap a large share of returns. The bank's stock and quantitative strategists believe that the pricing in the derivatives market reflects implied fluctuations after the release of the largest single-share earnings report in its data history since 2021. Meanwhile, as of September, corporate profits contributed 45% to the S&P 500's 12-month return, while in the “macro-dominant market” from 2022 to 2023, the corporate profit ratio lags far behind the rate of return. Bank of America stock strategist Ohsung Kwon said in a Sunday report: “This earnings season will probably be a paradise for stock pickers.” Kwon mentioned that the Federal Reserve cut interest rates by 50 basis points to 4.75%-5% last month, adding that “as the easing cycle begins, we expect the company's profits to account for a larger share of future returns.”

The Fed's interest rate cut bets have subsided, and the US dollar has recorded the longest continuous rise in nearly three years. The US unexpectedly strong employment report last week prompted the market to rule out the possibility that the Federal Reserve would cut interest rates by another 50 basis points this year. Since then, the dollar has soared to its highest level since mid-August. The Bloomberg Dollar Spot Index rose for the 8th day in a row, setting a record for the longest continuous increase since April 2022. Traders were forced to reconsider their bets on US easing after a series of unexpected data showed the resilience of the US economy. This reduces the need for the Federal Reserve to continue to cut interest rates sharply in the face of slowing inflation. Erik Wytenus, head of EMEA investment strategy at J.P. Morgan Chase Private Bank, said in an interview, “We often use the word 'resilience' to describe the health of the US economy, which is difficult to refute.” He added that this has boosted investors' preferences for US assets.

Dalio, founder of Bridgewater: A sharp cut in interest rates by the Federal Reserve is definitely not the case; US debt has become a “high-risk investment.” Ray Dalio (Ray Dalio), a billionaire investor and founder of the world's top hedge fund Bridgewater Fund, recently said that he doesn't expect the Federal Reserve to “cut interest rates drastically,” and that the pace of interest rate cuts starting at 50 basis points is by no means normal, because the US economy is still “in a relatively good balance,” and he emphasized that in view of the recent sharp fluctuations in the US Treasury bond market disrupted by interest rate cut expectations, US bonds have become a high-risk investment. He said, “Current US bonds are not a good investment. In my opinion, we have interest rate risks in the bond market.” Dalio said that investors focusing on the US bond market are betting that the Federal Reserve will take rapid steps to cut interest rates, yet this aggressive dovish expectation seems too hasty.

Guggenheim CIO: Inflation of up to 4% could become the new normal. Anne Walsh (Anne Walsh), chief investment officer at Guggenheim Partnership Investment Management, believes that the US inflation rate will rise back to 4% in the medium term. She said that although the inflation rate is expected to return to the Fed's target level of 2% in the short term, it probably won't last long. “We recently entered the world of re-inflation for the first time,” Walsh said. When the inflation rate returns to the Federal Reserve's 2% target, policymakers “should let go of that ridiculous ceiling and operate within a range because I don't think they can stay at this level for long.” In recent months, as price pressure has steadily declined from its peak in 2022, investors have turned their focus from inflation to economic growth, but after policymakers announced interest rate cuts of 50 basis points, the strong employment report released on Friday raised concerns that inflation would heat up again.

Goldman Sachs: The oil market's geopolitical risk premium has declined slightly, and oil is expected to rise by 10-20 dollars. Goldman Sachs said that following last week's Brent crude oilImplied VolatilityBoth the implied volatility of call options have risen sharply, and the geopolitical risk premium index for the crude oil market declined slightly this week. Goldman Sachs still expects that with Iran's oil production interrupted, the price of Brent crude oil will rise as high as 10 to 20 US dollars/barrel due to the uncertain progress of the geopolitical conflict. However, the bank also added that in the absence of major disruptions, oil prices may stabilize near current levels this quarter.

Individual stock news

Can Nvidia (NVDA.US) go crazy? The pre-market rise continued, and the stock price is approaching an all-time high! After experiencing a wave of “five consecutive increases,” Nvidia's stock price inadvertently climbed to near an all-time high. By the close of the US stock market on Tuesday, Nvidia had risen 4.05% to $132.89, only a “step closer” from the closing high of $135.58 previously set in June. As of press release, Nvidia's US stock rose more than 1% before the market on Wednesday and is expected to rise for the sixth consecutive trading day. At the same time, Wall Street is also full of bullishness. Analysts say strong demand for the new Blackwell chip series will enable Nvidia to achieve strong results next year.

Tech Big Mac Google (GOOGL.US) is facing a “moment of spin-off”! The US Department of Justice told federal judges that they are considering recommending that the tech giant Google forcibly sell part of its business to mitigate the monopoly damage caused by its monopoly on the online search market. If Google were actually split, this would also be a historic antitrust split. In addition to the spin-off, the US Department of Justice also recommended that Google provide more exclusive data transparency, allow competitors and new entrants to access and use search engine data, and reduce Google's advantage of using its platforms (such as Chrome, Play, and Android) to enhance its own search business. Since Washington unsuccessfully tried to split Microsoft 20 years ago, this is the most important step to control the illegal monopoly behavior of a major US technology company. This shows that Google may face a long-term legal battle similar to Microsoft at the time. The possibility of a spin-off will continue, and Google will need to go through a lengthy legal process to avoid a spin-off.

Negotiations have broken down again! Boeing (BA.US) withdraws 30% salary increase plan: there is currently no point in further negotiations. According to reports, Boeing and the International Association of Mechanics and Aerospace Workers (IAM) negotiated with federal mediators on a plan to raise wages by 30% and raise retirement benefits on Monday and Tuesday, but negotiations broke down, and Boeing and IAM mutually blamed each other for causing an impasse. Boeing said it had withdrawn the plan and said there is no point in further negotiations at this time. This indicates that the strike, which has been going on for almost a month, will continue, and Boeing's key manufacturing plant for commercial aircraft on the west coast of the United States will still be shut down.

Demand for AI chips remained strong, and TSM.US's Q3 revenue surged 39% above expectations. The major chipmaker Nvidia and Apple reported sales for the September quarter of NT$759.7 billion ($23.6 billion), higher than analysts' average expectations of NT$748 billion, which allayed concerns that AI hardware spending is beginning to decline. The company will announce its full third quarter results next Thursday.

Arcadium Lithium (ALTM.US) surged more than 30% in the premarket! Acquired by Rio Tinto (RIO.US) at a premium of $6.7 billion. Rio Tinto's proposed transaction to acquire Arcadium Lithium for $6.7 billion in cash was approved by the board of directors. This move will help the world's second-largest mining company become a major producer of key battery materials. Rio Tinto said in a statement on Wednesday that it will acquire Arcadium Lithium at a price of $5.85 per share. This is Rio Tinto's biggest deal since 2007, when it bought Aluminum Canada for $38 billion. Rio Tinto believes lithium will help it drive a new round of growth in the battery metals industry. Rio Tinto said the deal has been unanimously approved by both boards of directors and is expected to be completed by mid-2025.

Key economic data and event forecasts

At 21:15 Beijing time 2026 FOMC voting committee and Dallas Federal Reserve Chairman Logan delivered a speech on the current state of the economy

Changes in US EIA crude oil inventories for the week ending October 4 at 22:30 Beijing time

Beijing time 23:00 US IPSOS main consumer sentiment index PCSI for October

At 00:15 Beijing time the next day, 2024 FOMC voting committee and Richmond Federal Reserve Chairman Barkin delivered a speech

At 00:30 Beijing time the next day, Federal Reserve Vice Chairman Jefferson delivered a speech

At 02:00 Beijing time the next day, the Federal Reserve announced the minutes of the monetary policy meeting

Beijing time at 05:00 the next day, 2025 FOMC voting committee and Boston Federal Reserve Chairman Collins delivered a speech

Beijing time at 06:00 the next day, 2024 FOMC voting committee and San Francisco Federal Reserve Chairman Daly delivered a speech

Performance Forecast

Thursday pre-market: Delta Air Lines (DAL.US)