Preview of US Stock Market | Three major stock index futures all rise, UBS raises S&P 500 target price to 7900 points, and quantum computing concept stocks continue to rise.

Pre-market market trends 1. In pre-market trading on May 22 (Friday), the futures of the three major US stock indexes rose concurrently. As of writing, the Dow Jones Industrial Average futures rose 0.40%, S&P 500 index futures rose 0.25%, and Nasdaq futures rose 0.24%. 2. As of writing, the Germany DAX index rose 0.69%, the UK FTSE 100 index rose 0.26%, the France CAC 40 index rose 0.51%, and the Europe Stoxx 50 index rose 0.81%. 3. As of writing, WTI crude oil rose 1.32% to $97.62 per barrel. Brent crude oil rose 1.83% to $104.46 per barrel. Market News The bullish sentiment on Wall Street remains strong! Following Morgan Stanley, UBS Group AG also raised its S&P 500 target: bullish logic supported by AI profitability and consumer resilience. UBS Group AG Global Wealth Management released its latest outlook, raising the year-end target for the S&P 500 index from 7500 points to 7900 points by the end of 2026, with a target of 8200 points in June 2027. This is another Wall Street big bank that has raised its S&P 500 target in recent weeks. Previously, Morgan Stanley raised its year-end target for the S&P 500 index from 7800 points to 8000 points by the end of 2026, and HSBC also raised its target from 7500 points to 7650 points in mid-May, with senior strategist Adriana raising the target from 7700 points to 8250 points. Optimistic expectations around the S&P 500 are creating a wave of "target increases" on Wall Street. Nomura switches sides to join the "no rate cut" camp: as inflation impacts, the Fed's rate cut expectations for 2026 are completely defeated. Nomura Securities has joined a growing number of securities firms in predicting that the Fed will keep rates stable in 2026. Their reasoning is that inflation is sticky, and there is skepticism about policymakers' unanimous support for rate cuts. Nomura Securities had previously predicted that the Fed would cut rates by 25 basis points in September and December, but in a report on May 21, they stated that the rise in prices due to the Iran war and the expanding global semiconductor shortage were spilling over into consumer prices, keeping inflation high. Morgan Stanley and Barclays have already ruled out the possibility of a rate cut by the Fed this year, citing higher oil prices related to the Middle East conflict as a drag, while strong capital expenditure related to artificial intelligence is providing a boost. Urea shortage may continue until 2027, and North American fertilizer giants are rising! But investors beware: the reopening of the strait may be the moment of bubble bursting. Against the backdrop of ongoing disruptions in the global fertilizer supply chain due to the Middle East conflict, farmers worldwide are under immense pressure. About one-third of global trade in urea (a widely used nitrogen fertilizer) comes from the Gulf region. With the actual closure of the Hormuz Strait, urea prices have soared to multi-year highs, forcing growers to make temporary adjustments ahead of the autumn planting season, or face the risk of reduced production, profit losses, and even interruptions in global food supplies. The World Bank expects fertilizer prices to rise by nearly a third this year, reducing affordability to the worst levels since the Russia-Ukraine conflict in 2022. Of course, risks cannot be ignored. Investors need to beware that once the situation in the Middle East eases and the Hormuz Strait reopens, fertilizer prices could quickly fall back, potentially causing significant volatility in expectations for these stocks. Rapidan Energy sounds the alarm: if the Hormuz Strait remains closed until August, the global economy may face a "2008-style" recession. Energy consultancy Rapidan Energy says that if the Hormuz Strait remains closed until August, the global economy faces a risk of a recession on a scale similar to 2008. Rapidan Energy's baseline scenario assumes that this key global energy transport route will reopen in July, which would result in an average reduction of 2.6 million barrels per day in global oil demand, and benchmark Brent crude spot prices could reach nearly $130 per barrel in the summer. However, if the closure is extended, a more significant demand contraction would be needed to offset supply shocks in August and September, and its impact could even be enough to cause a year-over-year decline in global oil consumption in 2026. Pimco's Chief Investment Officer warns: if inflation expectations continue to rise, the Fed will be forced to tighten. Pacific Investment Management Company (Pimco) Chief Investment Officer Daniel Ivascyn says that if global bond yields rise further, it could lead to broader financial market turmoil as central banks, including the Fed, may need to take action if inflation expectations rise. Ivascyn warns, "If long-term inflation expectations become more noticeably unanchored, then even if the economy shows some weakness, you will see policy tightening." He adds, "This will be the most painful trade scenario for the market" as rising rates will increase pressure on the stock and credit markets. Saudi media claims to have exclusively obtained a draft agreement between the US and Iran on the verge of reaching an agreement. According to Saudi Arabia's Al Arabiya TV at 16:04 on the 22nd, the media exclusively obtained a draft agreement between the US and Iran "on the verge of reaching an agreement," including an immediate, comprehensive, and unconditional ceasefire on all fronts. The draft also includes commitments not to target military, civilian, or economic infrastructure; stop military operations and media wars; respect sovereignty and territorial integrity and not interfere in internal affairs; guarantee freedom of navigation in the Gulf, Hormuz Strait, and Oman Gulf; and establish joint supervision and conflict resolution mechanisms, among others. The draft also mentions "negotiating unresolved issues within 7 days," as well as "gradually lifting US sanctions on Iran in exchange for Iran's compliance with the agreement." According to sources, the agreement will take effect immediately after formal announcement by the US and Iran. It should be noted that the content of this draft obtained exclusively by Al Arabiya TV is extremely similar to the content reported by the Iranian Labor News Agency in the early hours, and the Iranian media cited sources from Al Arabiya TV, but Al Arabiya TV later refuted the report. Hormuz Strait navigation smooth, 35 commercial ships safely passed in a single day. The Iranian Islamic Revolutionary Guard Navy announced that 35 various types of vessels passed through the Hormuz Strait with coordination in the past 24 hours, including oil tankers, container ships, and other commercial vessels. The Revolutionary Guard stated that despite tensions in the Persian Gulf region, Iranian armed forces have created a safe maritime passage for shipping and global trade, with all ships completing their transit after receiving permission and maritime security coordination from the Revolutionary Guard Navy. According to the Japanese Ministry of Economy, Trade, and Industry, an oil tanker operated by Idemitsu Kosan under the Idemitsu crown has successfully passed through the Hormuz Strait and is expected to arrive in Japan as early as next Monday. This will be the first crude oil tanker to arrive in Japan since the end of February, when the United States and Israel launched strikes on Iran, causing the strait to close in fact. Stock-specific news The wave of artificial intelligence sets off: AMD (AMD.US) partners with Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR to accelerate production, striving to become the "computing base" of the AI era. Lisa Su, CEO of AMD (AMD.US), the leader in high-performance chips for PCs and data centers, said on Friday that AMD is significantly increasing production capacity in collaboration with its partners in Taiwan, China, to meet the far stronger-than-expected demand in the global data center CPU and GPU markets. Speaking after her visit to China, Su met with AMD's largest customers in China and globally to ensure that the supply capacity of its long-term partner the chip manufacturing giant Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR (TSM.US)can support a significant increase in output of data center central processing units (CPU) and AI GPU computing clusters amid. SpaceX cancels today's Starship V3 test flight, will retry launch on Friday. SpaceX delayed the launch of Starship V3 after troubleshooting, canceling today's test flight and rescheduling Starship launch for 17:30 Central Time on Friday (06:30 Beijing Time the next day). After a series of failures last year, SpaceX spent several months redesigning Starship, eventually launching the V3 design originally scheduled for Thursday. The launch on Thursday was canceled just seconds before liftoff due to abnormal readings of fuel temperature and pressure, with countdown pauses occurring multiple times. Musk stated on the Microsoft CorporationX channel that the hydraulic pin on the launch tower's giant mechanical arm failed to retract as designed. Analysts suggest that this may affect investor confidence in what could be the largest initial public offering SpaceX is about to embark on, valuing SpaceX at $1.75 trillion. The Trump administration bets $2 billion on the quantum computing industry, with support for companies such as IBM (IBM.US) and Infleqtion (INFQ.US). The US Department of Commerce announced on Thursday that the government will invest approximately $2 billion in equity capital in nine quantum computing companies to strengthen America's leading position in the field of quantum technology. According to the US Department of Commerce, IBM Corp will receive $1 billion in funding to establish a new company named "Anderon," dedicated to producing quantum computing chips. Meanwhile, Graphex (GFS.US) will receive $375 million in funding to build a domestic facility for manufacturing components required for quantum computing. The US Department of Commerce also stated that D-Wave Quantum (QBTS.US), Rigetti Computing (RGTI.US), and Infleqtion, among other companies, will each receive approximately $100 million in funding. Additionally, Australian quantum company Diraq will receive up to $38 million in funding to address key technological challenges limiting the performance improvement of quantum computing. Most related stocks continued to rise in pre-market trading on Friday, potentially extending the previous day's gains. AI "computing power anxiety" reignites! NVIDIA Corporation (NVDA.US) H100 GPU rental prices rise as cloud service providers Nebius (NBIS.US) follow suit. Following NVIDIA Corporation's disclosure that rental prices for its H100 GPU are still rising, AI cloud service providers Nebius (NBIS.US), CoreWeave (CRWV.US), and IREN Ltd (IREN.US) saw their stocks surge on Thursday. NVIDIA Corporation's Chief Financial Officer Colette Kress stated during the company's earnings call, "Since the beginning of the year, rental prices for the H100 have risen by 20%, while prices for A100 cloud services have risen by nearly 15%. Customers can achieve significant returns on GPUs after the depreciation period, thanks to the versatility of our platform and the continuous performance improvement brought by our software stack." Due to the continued high demand for AI GPUs, Nebius recently announced that the on-demand rental price for the H100 GPU will increase from $2.95 to $3.85 per hour. Meta (META.US) reaches a settlement in a lawsuit over teenage social media addiction, total compensation could reach $400 billion. Meta has reached a milestone settlement in a lawsuit accusing social media platforms like Instagram of causing teenage addiction to the internet, disrupting the learning environment at US schools, and forcing public schools to devote substantial resources to address mental health crises. According to court documents submitted on Thursday, Meta became the last tech company to reach a settlement in this case. There are estimated to be a large number of similar lawsuits filed by school districts across the US, which theoretically could expose these tech companies to a potential total compensation risk of nearly $400 billion. Broadcom Inc. (AVGO.US), Meta (META.US), and five other tech giants invest $125 million to build an AI semiconductor center with UCLA to solve the chip talent shortage. Faced with the dual challenges of explosive growth in the AI-driven semiconductor industry and a widening talent gap, global tech giants are accelerating their strategic reach into academia. Broadcom Inc., Meta, Applied Materials (AMAT.US), Graphex, and Synopsys, Inc. (SNPS.US) jointly announced that they will partner with the UCLA Samueli School of Engineering to establish a "Semiconductor Center" with a total investment of $125 million, aimed at accelerating research and talent development in AI-driven chip technology. The initial collaboration period for the project is five years, during which the five companies will drive innovation research and development across the entire semiconductor ecosystem, including chip design, equipment, software, manufacturing, and more. Upcoming important economic data and events 10:00 Beijing time: Final value of the University of Michigan Consumer Confidence Index for May in the US. 11:00 Beijing time: Swearing-in ceremony for the new Fed Chair Wosh.