U.S. Stock Market Outlook | Three Major Index Futures Decline Together, AI Inflation Sparks Concerns Over Demand Backlash, Storage Chips and Optical Communication Stocks Drop Ahead of Market Open

Pre-Market Market Trends

1. As of June 26 (Friday), U.S. stock index futures are all down before the market opens. As of the time of writing, Dow futures are down 0.07%, S&P 500 futures are down 0.50%, and Nasdaq futures are down 1.23%.

1. As of the time of writing, the German DAX index is down 1.26%, the UK FTSE 100 index is down 0.85%, the French CAC 40 index is down 0.97%, and the Euro Stoxx 50 index is down 0.87%.

1. As of the time of writing, WTI crude oil is down 2.43%, priced at $70.17 per barrel. Brent crude oil is down 2.54%, priced at $73.58 per barrel.

Market News

Apple and Microsoft price hikes signal danger! AI inflation may backfire on demand. On Thursday, Apple and Microsoft raised the prices of their products, citing significant increases in storage and memory costs. The price hikes from Apple and Microsoft indicate that upstream cost increases have exceeded the ability of leading companies to absorb them, and AI costs are beginning to flow from data centers to consumers. The market is thus questioning how long upstream profits can hold if consumers are unwilling to pay for AI costs. The price increases from Apple and Microsoft send a signal that the enhanced pricing power in the industry may come at the expense of future demand, prompting a comprehensive repricing of AI-related semiconductor stocks. Charu Chanana, Chief Investment Strategist at Saxo Markets, stated: "The storage chip market still has sustained momentum, but the positive factors have become more selective, while negative factors cover a broader market." "The risk is that today's stronger storage chip boom may drag down the entire AI industry chain tomorrow, and the market has already begun to price this in."

The strong dollar storm returns! Under Waller's leadership, the Federal Reserve shatters devaluation trades, and the 'American exceptionalism' returns to view. Since Waller took charge of the Federal Reserve, the price stability mechanism and the reform of the Fed's expectation management mechanism have been re-centered on a "minimal communication mode," combined with Wall Street's repricing of the interest rate hike path, leading to a strengthening dollar index, which is set to record one of its best months in a year. As of the mid-year point, the dollar has gained 3%, becoming the best-performing major currency. Meanwhile, top foreign exchange market strategists from major banks such as JP Morgan, Bank of America, and Goldman Sachs have re-expressed their strong bullish confidence in the dollar exchange rate after Waller vowed to restore price stability, stimulating market bets on interest rate hikes In addition, Goldman Sachs, Standard Chartered, and Deutsche Bank all emphasized that AI is enhancing expectations for U.S. economic growth, corporate profitability, and stock market returns, attracting global capital to continue flowing into U.S. assets, making the U.S. dollar the main beneficiary of future AI profits.

Walsh's "Credibility Gamble": Saying the harshest words may mean not having to raise rates the most. An important indicator of long-term inflation expectations—the 10-year breakeven inflation rate—has fallen from over 2.5% in mid-May to about 2.2% this week, marking a low not seen in over a year. Market participants pointed out that this decline is influenced by oil prices returning to pre-U.S.-Iran conflict levels and reflects the stronger signals released by the Federal Reserve in its latest meeting. Several large asset management firms believe that Walsh's emphasis on curbing price increases is strengthening his credibility in the market and lowering long-term inflation expectations. Fidelity International fund manager Riedel noted that the extent of the decline in inflation expectations has exceeded what can be explained by oil price fluctuations alone. He believes this is mainly due to the central bank's more hawkish stance, "which has earned the Federal Reserve more credibility in fighting inflation in the market." Barclays Bank's U.S. inflation strategy head Hill pointed out: "The dual impact of the hawkish (Federal Reserve meeting) and the temporary resolution of the Iran war has reduced the market's perception of inflation risk, leading to a significant drop in market inflation expectation indicators."

Spot gold briefly fell below $4,000; is the gold bull market over? On Friday, spot gold dropped to $3,983.32 per ounce at one point, and as of the time of writing, it has rebounded to $4,046 per ounce. Data shows that gold prices have fallen from a high of $5,321 in early March, dropping below $4,000, a decline of over 25%. The current market panic mainly stems from two factors: inflation fears, with the U.S.-Iran conflict pushing up oil prices and inflation, leading to concerns about resilient U.S. inflation and forming expectations for monetary tightening; the Federal Reserve's hawkish turn, with the current market believing that the Fed's policy focus is on "controlling inflation," and the futures market has priced in rate hikes by the Fed in 2026 and 2027 to restore the dollar's credibility, with a stronger dollar suppressing gold. Some analysts pointed out that the drop in gold prices below $4,000 per ounce does not signify the end of the long-term gold bull market, but rather a phase correction after a rapid rise. From a medium to long-term perspective, the continuous accumulation of gold by global central banks, the high debt environment globally, and the trend of diversifying international reserves remain unchanged, and the strategic allocation value of gold still exists. It is expected that gold will shift from a previous one-sided rise to a phase of high volatility and wide fluctuations, with short-term adjustment pressure still present, but the medium to long-term trend will still depend on Federal Reserve policy, dollar movements, and changes in global geopolitical risks.

Individual Stock News

Storage chip and optical communication stocks broadly declined. On Friday, before the U.S. stock market opened, as of the time of writing, Micron Technology (MU.US) and SanDisk (SNDK.US) fell nearly 5%, Western Digital (WDC.US) dropped nearly 4%, and Seagate Technology (STX.US) fell over 3%. In the optical communication sector, Tower Semiconductor (TSEM.US) fell over 6%, Marvell Technology (MRVL.US), Coherent (COHR.US), and AXT Inc (AXT.US) dropped nearly 4%, while Credo Technology (CRDO.US), Astera Labs (ALAB.US), Lumentum (LITE.US), and Nokia (NOK.US) fell over 3% Corning (GLW.US) fell over 2%.

Apple (AAPL.US) faces "double headwinds"! iPhone sales in China drop 19% in a single month, while storage price surge forces Mac and iPad price increases. International investment bank UBS, in its latest research report, cited statistics from the China Academy of Information and Communications Technology, emphasizing that sales of Apple's iPhone series products in the Chinese market significantly declined by 19% year-on-year in May. This data adds to the pressure on Apple, which is already grappling with the soaring prices and shortages of storage chips. On Thursday, Apple raised the prices of most of its consumer electronics (excluding the iPhone series), attributing these changes to unprecedented strong demand caused by large-scale purchases of memory, solid-state drives, and other storage chip components for artificial intelligence data centers.

Disrupting a $1.6 trillion market? SpaceX (SPCX.US) plans to launch "Starlink" mobile service, targeting the three major U.S. telecom giants. According to insiders, Elon Musk's SpaceX has revealed to investors its plan to launch a brand new Starlink mobile service for U.S. consumers. This move means that the space giant, known for its reusable rockets and satellite internet, will officially enter the core territory of Verizon (VZ.US), AT&T (T.US), and T-Mobile (TMUS.US) to compete directly. SpaceX President and COO Gwynne Shotwell stated during a recent IPO roadshow that the company is considering launching a Starlink retail product and may establish its own ground mobile network in the U.S.

ON Semiconductor (ON.US) to acquire Synaptics (SYNA.US) for $6.2 billion in an all-stock deal, with a 19% premium targeting smart systems. ON Semiconductor has agreed to acquire Synaptics, which specializes in semiconductors for smart devices, in an all-stock transaction valued at approximately $6.2 billion. According to the company's statement, investors holding each share of Synaptics stock will receive 1.35 shares of ON Semiconductor common stock, representing about a 19% premium based on the closing prices of ON Semiconductor and Synaptics over the past 10 trading days. A year ago, ON Semiconductor abandoned its efforts to acquire Allegro MicroSystems Inc. for $6.9 billion after determining that "there was no viable path" to complete the deal. Regarding the latest acquisition target, the company stated that it is seeking to expand its business from power and sensing to smart systems. As of the time of publication, Synaptics rose over 3% in pre-market trading on Friday.

Bitcoin crash leads to $13 billion unrealized losses! Strategy (MSTR.US) financing model faces market scrutiny. Reports indicate that, based on market capitalization, Strategy is currently facing over $13 billion in unrealized losses. According to fair value accounting standards, if this portion of losses is included in the income statement, it could result in the company recording a massive quarterly loss. The expanding book losses are also accompanied by a significant drop in Strategy's stock price Strategy has long relied on financing through the issuance of stocks and preferred shares, continuously using the raised funds to purchase Bitcoin. This model has helped the company become one of the largest corporate holders of Bitcoin globally and has also become an important incremental source of funds driving the continuous rise of Bitcoin. However, as Bitcoin prices remain below $60,000 for an extended period, the company's financing costs continue to rise, and the price of its preferred shares STRC has significantly declined, more and more investors are beginning to question whether this financing model can continue to operate.

FedEx Freight (FDXF.US) Splits Debut: Q4 Operating Profit Plummets, Future to Bet on High-Profit Segments. The financial report shows that the company's fourth-quarter revenue reached $2.4 billion, a year-on-year increase of 4.8%; operating profit was $158 million, a year-on-year decrease of 66.9%; adjusted operating profit was $363 million, a year-on-year decrease of 23.9%. The operating profit margin was 6.6%, and the adjusted operating profit margin was 15.1%, while the operating profit margin in the same period last year was 20.8%. FedEx Freight is exploring new businesses in areas such as data center infrastructure, fresh groceries, and healthcare to plan for its future as a new independent company. The company's CEO, John Smith, stated that prior to its split from the parcel delivery giant FedEx (FDX.US) earlier this month, FedEx Freight had been assembling a dedicated sales team over the past year, aiming to win business in segments that have historically been less involved but have attractive profit margins.

Important Economic Data and Event Forecast

Beijing Time 22:00 U.S. June University of Michigan Consumer Sentiment Index Final

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