Preview of US Stock Market | Futures of the three major stock indices rose together, heavyweight technology companies' financial reports will come out this week.

Pre-market Market Trends 1. Before the market on July 21 (Monday), the futures of the three major US stock indexes rose together. As of the time of writing, Dow Jones Industrial Average futures were up 0.21%, S&P 500 Index futures were up 0.23%, and Nasdaq futures were up 0.24%. 2. As of the time of writing, the Germany DAX index fell by 0.06%, the UK FTSE 100 index fell by 0.08%, the French CAC40 index fell by 0.37%, and the Euro Stoxx 50 index fell by 0.40%. 3. As of the time of writing, WTI crude oil was up 0.02% at $66.06 per barrel, while Brent crude oil was down 0.12% at $69.20 per barrel. Market News S&P and Nasdaq approach historical highs, earnings of "seven giants" to determine the direction of US stocks. The S&P 500 Index and the Nasdaq Composite Index are hovering near historical highs, despite escalating tariffs and debates over monetary policy. Last week, the Nasdaq led with a 1.6% gain, the S&P 500 climbed 0.7%, and the Dow Jones Industrial Average was relatively flat. The second-quarter earnings season kicked off with large banks exceeding expectations, followed by streaming giant Netflix also delivering impressive results, both showing the resilience of US consumer spending. In the coming week, 112 S&P 500 companies will report quarterly earnings, with a focus on tech giants like Alphabet (GOOGL.US) and Tesla, Inc. (TSLA.US). Evercore ISI's head of equity derivative strategy, Julian Emmanuel, warned that after a 30% rebound from the April lows, the S&P 500's P/E ratio is now at 24.7 times, meaning that even strong earnings may only sustain current highs, and any slight disappointments could trigger a significant pullback. Alphabet and Tesla, Inc. will kick off the earnings releases for the "seven giants" tech stocks. It is expected that these stocks will once again lead the earnings growth for the S&P 500 this quarter. Second-quarter earnings for the "seven giants" are expected to increase by 14.1% year-over-year, while the remaining 493 stocks in the index are expected to only increase by 3.4%. This means that the likelihood of better-than-expected earnings for the S&P 500 largely depends on the performance of large tech companies. Economic data will feature manufacturing and services activity indices, while the Federal Reserve has entered the quiet period before the July 29-30 policy meeting. US stock earnings season stuck in a "zero tolerance" dilemma: just meeting expectations is not enough, high valuations become Wall Street's "tightrope". As the earnings season progresses, Wall Street is sending a clear message to companies: just "performing well" is not enough. Large banks like JPMorgan Chase and Bank of America Corp reported solid earnings and indicated consumer resilience, but their stock prices had limited gains by the end of last week. Netflix (NFLX.US), with a P/E ratio of around 40 times, faced a more severe market reaction. Despite the streaming giant announcing revenue and profit that exceeded expectations and raising its full-year guidance, its stock price still fell 5% last Friday. William Blair analyst Ralph Schackart commented on Netflix's earnings, saying that "overall 'good' results and guidance were not good enough given elevated expectations." This disconnect between performance and stock price reactions is not an isolated case. As the earnings season progresses, the overall market is facing high valuations, with a growing realization that even strong earnings may not be enough to justify current stock price levels. Hidden concerns behind repeated highs in US stocks! Weakening momentum may signal a peak in the uptrend. Currently, the US stock market is nearing historical highs, as the market generally believes that the US economy is still strong under President Trump's tariff policies and inflation remains moderate. However, beneath the surface of the stock market reaching new highs this month, signs indicate that this uptrend is losing momentum. The S&P 500 index has not seen a daily change of 1% in 17 consecutive trading days, the longest period of relative calm since December of last year. Matt Maley, chief market strategist at investment firm Miller Tabak, believes that this decrease in volatility indicates that the market's momentum is waning after a strong rebound from the lows in April due to tariffs. There are other signs that momentum is weakening. Dan Greenhaus, chief market strategist at Solus Alternative Asset Management, pointed out that the proportion of S&P 500 constituents above their 20-day or 50-day moving averages has recently declined, indicating that this uptrend may be losing momentum. Maley said that against the backdrop of recent news about the US Federal Reserve chairman position and President Trump's trade war, investors seem to be getting tired of waiting for more stocks to join the rally dominated by tech stocks in the US market. He said, "When a narrow uptrend begins to lose momentum, it often means that investors are looking for signs of broader gains. When they don't see those signs, they often temporarily withdraw from the market." Rumors of Trump firing Powell shake the market, investors position for "steepening trades" to hedge risks. Last Monday, news that President Trump might fire Federal Reserve Chairman Powell triggered a global market shock. At this crucial moment, Citrini Research analyst James Vanjelen quickly issued a "macro trading" alert to around 50,000 clients, proposing a concise strategy: buy two-year US Treasury bonds and simultaneously sell ten-year US Treasury bonds. The logic behind this operation is that if the new Fed chairman is more inclined to cooperate with Trump's interest rate cut demands, short-term bond yields may fall due to expectations of loose monetary policy; while concerns about the weakening independence of the central bank could push up long-term inflation expectations, thereby raising long-term bond yields. It is worth noting that this expectation was quickly confirmed after Powell's subsequent speech, with market volatility even exceeding initial predictions. Although Trump later denied the plans, causing some market reactions to reverse, Vanjelen and other investors persisted with their original strategy, seeing the once unthinkable risk as slowly becoming a real threat. Wells Fargo & Company reveals "data lies", 60-year pattern suggests crisis approaching! In a recent report, Wells Fargo & Company points out that behind seemingly positive US economic data lies a "frightening" recession signal a decline in non-essential service-related consumer spending, a trend that has only occurred during or immediately after economic downturns in the past 60 years. This finding sharply contrasts with the mainstream narrative on Wall Street that believes "tariffs have not caused significant damage to the economy". Economists Tim Quinlan and Shannon Grein of Wells Fargo & Company highlighted in a recent report that the notion of "moderate tariff impact" is a "false narrative". They found that consumer spending data has been significantly revised downwards from initial optimistic values, with service spending growth decreasing from the initially reported 2.4% to just 0.6%. More concerning is that this downward trend continued into the second quarter. While non-essential goods spending remains stable, service spending saw a year-over-year decline of 0.3% as of May. "Although the decline is not large, the alarming fact is that for more than 60 years, this indicator has only declined during or immediately after a recession," warned the two economists. Wells Fargo & Company emphasized, "Consumer spending is far less robust than we initially thought even less so than what was initially reported. While a stable labor market may offset inflation caused by tariffs, consumer behavior has indeed changed." Stock-specific News Verizon (VZ.US) exceeds Q2 earnings expectations, raises full-year profit and free cash flow guidance. The earnings report shows that Verizon's Q2 revenue increased by 5.2% year-over-year to $34.5 billion, surpassing analysts' expectations of $33.7 billion; adjusted earnings per share were $1.22, up from $1.15 in the same period last year, and beating analysts' expectations of $1.19. The company has raised its 2025 profit guidance, expecting an increase of 1-3% in adjusted earnings per share for the full year, with the midpoint of this forecast being 2%, higher than analysts' expectations of 1.7%. In addition, the company has also raised its 2025 free cash flow guidance to $19.5-20.5 billion, up from the previous $17.5-18.5 billion a key metric of investor interest, as the stock's attractiveness mainly comes from its generous dividend supported by cash flow. However, the number of customers opting to exit phone contracts in the second quarter exceeded expectations, possibly due to cheaper phone contracts becoming more appealing amid concerns of potential inflation. As of the time of writing, Verizon was up over 4% pre-market on Monday. Microsoft Corporation (MSFT.US) vulnerability triggers global security crisis! Over 10,000 enterprise servers at risk. Microsoft Corporation's server software is under attack by unknown hackers, with cybersecurity analysts warning of potential widespread security vulnerabilities globally. Microsoft Corporation stated that it has released a new security patch for SharePoint servers "to mitigate active attacks against on-premises servers" and is deploying more fixes. The US Cybersecurity and Infrastructure Security Agency confirmed the vulnerability, stating that attackers could exploit it to access file systems, internal configurations, and execute code over networks. Michigan-based cybersecurity company Censys researcher Silas Lecal estimated that over 10,000 enterprises using SharePoint servers worldwide are at risk, with the highest number of affected companies being in the US, followed closely by the Netherlands, the UK, and Canada. US tariffs fierce as a tiger! Stellantis (STLA.US) may face a loss of 2.3 billion euros in the first half of the year. Stellantis announced on Monday that its second-quarter global total deliveries are estimated to be 1.4 million vehicles, a 6% decrease year-over-year. This delivery data reflects production pauses due to early North American tariff issues and adverse effects from product transitions in the European region. Stellantis also released preliminary financial data for the first half of 2025, with expected net revenue of 743 billion euros and a net loss of 2.3 billion euros. According to Stellantis, the early effects of US tariffs include: generating a net tariff expense of $300 million and production losses associated with the response plan. Stellantis is currently taking early actions to improve performance and profitability, with new products expected to bring greater benefits in the second half of the year. Stellantis will release full financial results for the first half of 2025 on July 29th. BP p.l.c. Sponsored ADR (BP.US) in leadership crisis: former CRH CEO appointed as new chairman, strategic recalibration restarted under pressure from activist investors. BP p.l.c. Sponsored ADR announced on Monday the appointment of Albert Manifold, former CEO of construction materials producer CRH (CRH.US), as the new chairman. Currently, BP p.l.c. Sponsored ADR is struggling to make major strategic transformations in an attempt to reverse its low stock price. Manifold has no prior experience in senior roles in the energy industry, and he will take over from Helge Lund starting in October. Currently, BP p.l.c. Sponsored ADR is cutting back on spending for renewable energy plans while continuously facing market speculation about acquisitions and spin-offs. During his 11-year tenure at CRH, Manifold led the Irish company in restructuring its asset portfolio and relocated its primary listing to New York in 2023, during which time the company's stock price nearly quadrupled. Morningstar analyst Allen Good said, "BP p.l.c. Sponsored ADR is embarking on a similar transformation journey, and Manifold's experience may be beneficial to him and the company." Earnings Forecast Tuesday morning: NXP Semiconductors NV (NXPI.US) Tuesday pre-market: Coca-Cola Company (KO.US), General Motors Company (GM.US)