Preview of US Stock Market | The three major stock index futures are all rising, with chip and optical communication stocks rising before the market opens. The Middle East war is escalating as technology giants release their financial reports.

Pre-market market trends 1. Before the market opened on July 20th (Monday), the futures of the three major US stock indexes rose together. As of the time of writing, Dow Jones futures rose 0.48%, S&P 500 index futures rose 0.59%, and Nasdaq futures rose 1.08%. 2. As of the time of writing, the Germany DAX index rose 0.52%, the UK FTSE 100 index fell 0.11%, the France CAC 40 index rose 0.56%, and the Europe Stoxx 50 index rose 0.46%. 3. As of the time of writing, WTI crude oil fell 1.81% to $80.30 per barrel. Brent crude oil fell 1.33% to $86.93 per barrel. Market News Middle East conflicts escalate with the tech giants' earnings season! The market is waiting for the tech giants to provide a "quantifiable AI investment return." This week, in the background of escalating political tensions in the Middle East GEO Group Inc and the Philadelphia Semiconductor Index entering a bear market, investors will enter another five trading days with an extremely dense financial schedule. The most anticipated are the two tech giants, Alphabet Inc. Class C (GOOGL.US) and Tesla, Inc. (TSLA.US), which will announce their earnings after the US stock market closes on Wednesday. In addition, IBM (IBM.US), Intel Corporation (INTC.US), and Texas Instruments Incorporated (TXN.US) will also announce their latest earnings this week. In the context of escalating political turmoil in GEO Group Inc and severe pullback in AI trading, the performance and future outlook of these tech giants will be the key pricing gateways to test whether the unprecedented AI computing power capital expenditure can be translated into actual revenue, cash flow, and investment return, and will determine whether the current AI trading sell-off trend has come to an end. AI trading retreat combined with increased risks in GEO Group Inc! Wall Street bets on a "high volatility storm" for the summer of the US stock market. Momentum trading driven by rising stock markets is losing steam, and optimistic earnings expectations are being scrutinized, both indications that the summer market may see higher volatility. As investors face increasing risk factors challenging the overall bullish view, index volatility is gradually rising. Crowded AI-related trades are undergoing severe reversals, triggering massive fund rotations. In addition, while the current market remains calm about the escalating political tensions in GEO Group Inc, if the situation escalates further, it will put pressure on the current widely expected dovish monetary policy view. At the same time, there is a rapid growth in demand for risk hedging tools. The Nations SkewDex index has risen to its highest level since April, measuring the cost difference between out-of-the-money put options and at-the-money options in the most liquid exchange-traded funds (ETFs) in the S&P 500 to gauge market skewness, which may drive further increases in other volatility indices. SocGen: AI boom raises individual stock volatility, but overall market risks are manageable. SocGen strategist Gitesh Kumar pointed out that while the AI investment cycle may continue to raise stock volatility, the macroeconomic environment still provides support for the stock market. The bank believes that resilient economic growth, a strong labor market, and positive fiscal policy continue to limit the overall downside risks to the market. Investors are increasingly differentiating between individual winners and losers in companies, pushing up the volatility of individual stocks and lowering the correlation between stocks to historical lows. The report suggests that market leadership may continue to concentrate on AI-related companies rather than broad index levels. While technical risks such as leveraged ETF activity and crowded positions may trigger intermittent spikes in volatility, SocGen expects such volatility to be temporary unless there is a significant deterioration in economic fundamentals. Middle East conflicts heading towards losing control? Tanker attacks, bombings of oil infrastructure, Brent crude oil once reached $90. The latest situation shows a significant escalation in US-Iran military confrontations. The US has carried out consecutive nine night attacks on Iran, targeting Revolutionary Guard military capabilities, missile and drone systems, as well as transportation, electricity, and other infrastructure. In response to the US attacks, Iran has continued to strike multiple military bases in the Middle East where US troops are stationed. However, this does not yet signify an irreversible full-scale regional war, and the key turning point is whether major oil-producing countries such as Saudi Arabia, the UAE, etc., will continue to be attacked and whether the Houthi armed forces will effectively block the Strait of Hormuz. The ongoing political hostilities in the Middle East GEO Group Inc have raised concerns about supply shortages in the market. A recent report by JPMorgan Chase shows that excluding China, global oil inventories are at historically low levels, leaving very little room for error in the global energy market. Powell and the bond market reach a consensus: The Fed's fight against inflation is far from over. The US Department of Labor reported a monthly decline in consumer prices in June for the first time since 2020, which eased tensions in the financial markets - investors quickly unwound their bets on "the Fed possibly starting to raise interest rates later this month" last week. However, this is likely just a temporary respite. Oil prices have risen again after the US-Iran ceasefire agreement collapsed. Despite concerns about the tech stock bubble, massive spending in the field of artificial intelligence continues to stimulate the economy. And Jay Powell, who took over as Chairman of the Fed two months ago, has made it clear that the central bank's primary task is to keep inflation in check - inflation has remained above the 2% annual target for the past five years. Therefore, although traders currently see little possibility of a rate hike in July, they are betting that a 25 basis point rate hike in September or October is highly likely, and they see a rate hike before December as almost certain. Stock news Chip stocks and optical communication stocks rise pre-market. Before the opening of the US stock market on Monday, as of the time of writing, Micron Technology, Inc. (MU.US) and SanDisk (SNDK.US) rose more than 4%, Western Digital Corporation (WDC.US) and Seagate Technology Holdings PLC (STX.US) rose nearly 4%; AMD (AMD.US) rose more than 5%, Intel Corporation (INTC.US) and Qualcomm (QCOM.US) rose more than 2%, Broadcom Inc. (AVGO.US) and NVIDIA Corporation (NVDA.US) rose more than 1%. On the optical communication side, Credo Technology (CRDO.US) rose nearly 4%, Coherent (COHR.US) and Lumentum (LITE.US) rose more than 3%, AXT Inc (AXTI.US) and Astera Labs (ALAB.US) rose nearly 3%, Corning Inc (GLW.US), Marvell Technology, Inc. (MRVL.US), and Nokia Oyj Sponsored ADR (NOK.US) rose more than 2%. Apple Inc. (AAPL.US) price hike in Japan spreads to the iPhone, with a maximum increase of 20,000 Japanese yen across the new models. Apple Inc. has raised prices for several iPhone models in the Japanese market, with price increases of up to 11% for some models in its smartphone series. According to prices published on the Apple Inc. Japan online store, this price adjustment applies to the iPhone 17 series, iPhone Air, and iPhone 16. Depending on the model, prices have increased by between 8,000 yen and 20,000 yen. Apple Inc. has not publicly explained this latest price change, but exchange rate pressure may be a factor behind it - the price increase coincides with a weak Japanese yen against the US dollar, which has reduced the value of overseas income when converted back to US dollars. At the same time, Apple Inc. has been dealing with higher component costs. The company raised prices for several other products, including Mac and iPad, last month, but at that time iPhone prices remained unchanged. The AI super cycle triggers a capacity war: Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR (TSM.US) adds billions to Arizona, $265 billion invested in the US AI chip landscape. TSMC CFO Huang Renzhao stated in an interview that with the continuous emergence of a "multi-year demand super trend" from customers, the company is accelerating the capacity ramp-up of its factory in Arizona. Faced with the structural surge in demand for AI chips in recent years, Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR is significantly expanding its investment footprint in the US, promising an additional $100 billion in investment and aggressively expanding its chip manufacturing layout in the US. This additional commitment raises TSMC's total investment in Arizona to $265 billion, highlighting the massive capacity expansion driven by AI while prompting the company to raise its full-year capital expenditure expectations to the range of $60-64 billion. Huang Renzhao stated that this additional investment in the US market is driven by strong customer demand and government support. Boeing Company (BA.US) capacity expansion reaches a critical turning point! FAA reinstates final airworthiness certificates for 737 Max and 787 new aircraft. After a near-disastrous incident with a 737 Max aircraft in 2024, regulatory authorities found Boeing Company had a series of quality issues. Subsequently, the Federal Aviation Administration (FAA) restricted Boeing Company's aircraft production rates and revoked the company's authority to sign final airworthiness certificates for new aircraft. The decision to restore Boeing Company's related authorities will officially take effect on July 20th, reflecting the progress the company has made in improving quality management and regaining trust from regulatory authorities. This is crucial for Boeing Company to expand its production scale, improve financial performance, and regain an edge in competition with rival Airbus. Currently, the US aircraft manufacturer is working to stabilize the production of its "cash cow" product, the 737 series aircraft, with a target of maintaining a monthly output of 47 aircraft and planning to gradually increase it to 63 aircraft over the next few years. In addition, the FAA stated that regulatory authorities will continue to oversee the quality levels of this aircraft manufacturer. Earnings reports Tuesday pre-market: Novartis AG Sponsored ADR pharmaceuticals (NVS.US), Charles Schwab Corp (SCHW.US), General Motors Company (GM.US)