Preview of US Stock Market | Three major stock index futures rise together, NVIDIA Corporation (NVDA.US) heavyweight financial report to be released after the market closes.

Pre-market market trends 1. Before the market on May 20th (Wednesday), the futures of the three major U.S. stock indexes rose. As of the time of writing, the Dow Jones futures were up 0.20%, the S&P 500 index futures were up 0.32%, and the Nasdaq futures were up 0.56%. 2. As of the time of writing, the German DAX index rose by 0.29%, the UK FTSE 100 index rose by 0.13%, the French CAC 40 index rose by 0.54%, and the European Stoxx 50 index rose by 0.66%. 3. As of the time of writing, WTI crude oil fell by 1.78% to $102.52 per barrel. Brent crude oil fell by 2.60% to $109.18 per barrel. Market news The AI boom is reshaping the bond market logic and driving long-term yield increases. Despite confusion over the simultaneous prosperity of artificial intelligence and rising borrowing costs, the two are closely related. Beyond the fervor for AI investment, surging long-term productivity is driving up estimated neutral interest rates. Goldman Sachs Group, Inc. estimates that AI capital expenditures over the next five years will reach $7.6 trillion, which could be a major factor driving bonds and stocks and forcing investment institutions to reassess the long-term impact of AI on the macroeconomy. The International Financial Association indicates that a successful AI cycle should raise neutral interest rates, as higher expected returns and stronger capital formation will increase expected investment relative to savings levels. Barclays' annual research reaches similar conclusions, stating that rising productivity and enormous capital expenditure demands point to higher neutral real interest rates, with the long-term bond market possibly undergoing a repricing. AI data center financing frenzy sparks market concerns Bank of America Corp: Tech giants' debt expansion poses potential credit risk. Bank of America Corp's latest survey shows that capital spending by super-large AI cloud vendors has rapidly become one of the most concerning potential credit risks for global investors. Survey data shows that approximately 34% of the fund managers surveyed in May believe that AI-related capital expenditures are most likely to trigger future systemic credit events, doubling from 17% in April. While the private credit market in the US remains the biggest source of concern at 42%, it is significantly lower than 57% in the previous month. Since the beginning of last year, tech companies have raised over $300 billion in financing through the US bond market for AI infrastructure construction, with investment banks forecasting a significant increase in financing size in the coming months. Market concerns revolve around tech companies levering up for AI construction at an unprecedented pace, with significant uncertainty over whether the investments will yield sufficient returns in the future. 2026 FOMC voter Paulsen "hawkish": inclined to keep rates unchanged Rate cuts are contingent on continued progress in combating inflation. As a voting member of the 2026 Federal Open Market Committee (FOMC), Federal Reserve Bank of Philadelphia President Anna Paulsen stated that she is inclined to keep rates unchanged and believes it is only appropriate to cut rates if there is continued progress in combating inflation. Paulsen said on Tuesday, "Current monetary policy has mild restrictive effects, which are helping to suppress inflationary pressure, while the labor market continues to remain stable." "Keeping rates unchanged allows us to assess how the economy is evolving, as well as the risks to price stability and the labor market." US bond turmoil shatters rate cut dreams! Market expectations reversed: probability of Fed raising rates as high as 43% this year. Rising US bond yields have fundamentally changed market expectations for the timing of the Fed's next rate hike. Data from forecasting trading platform Kalshi shows that traders believe there is a 63% probability that the Fed will raise rates before July 2027, and a 43% probability of a rate hike this year. Traders on another forecasting platform, Polymarket, believe there is a 35% probability of a rate hike in 2026. Samsung union negotiations collapse! Will go on full strike on Thursday Global storage chip supply chain sounds "cut-off" alarm. Samsung Electronics' negotiations with its largest union have collapsed, leading the world's largest memory chip maker to face a worker strike that will impact operations. Union leader Choi Seung-ho said in Sejong City, where the negotiations took place, that a full strike will take place on Thursday after the company management rejected a mediation proposal already accepted by the union. The breakdown in negotiations threatens the global tech supply chain, as Samsung is the world's largest chip supplier, with its products widely used in a variety of devices from data center servers, smartphones to electric vehicles. The company also faces production delays and issues with the development of next-generation semiconductors. Bond market storm sweeping the globe, fixed income giant Pimco brings a boost! Calling for the most steep yield curve "recovery moment". The Pacific Asset Management (Pimco), one of the world's largest fixed income investment giants, sees significant investment opportunities in Japan's 30-year sovereign bond assets, which are currently facing massive sell-offs. The world's steepest long-term bond yield curve is now at a recovery window, as global bond market traders' concerns over inflation and government spending have pushed these bond yields to record levels. Marc Seidner, Chief Investment Officer of Pimco's non-traditional strategy markets, stated that compared to other developed markets, Japan's long-term bond yield curve has become "too steep", creating attractive investment opportunities in longer-term debt. Stock market news NVIDIA Corporation (NVDA.US) Q1 earnings will hit the U.S. stock market after-hours tonight. NVIDIA Corporation will release its first quarter fiscal year 2027 earnings report in the early morning of May 21st (after U.S. market hours on May 20th). This is not just a quarterly report for a chip giant, but a key indicator of whether the global AI infrastructure investment wave can continue, as stated by Ben Snyder, US stock strategist at Goldman Sachs Group, Inc., NVIDIA Corporation has contributed to approximately 20% of the S&P 500 index gains this year, "investors of almost all asset classes globally are watching this earnings report." Analysts generally expect NVIDIA Corporation to have revenue of $78.9 billion this quarter, up 79% year-over-year, with earnings per share of $1.77. However, in the eyes of major investment banks, this number is considered conservative. Amazon.com, Inc. (AMZN.US) AI ASIC reaches a structural inflection point: gaining industry favor. Reports indicate that Amazon.com, Inc.'s Trainium artificial intelligence accelerator is gaining popularity among some AI developers who have traditionally relied on products from NVIDIA Corporation (NVDA.US). Daniel Svonava, CEO of Superlinked, said, "We have always considered software support to be a barrier. However, this situation has changed in the past few months, and that barrier has been removed." Another developer, Bojan Jakimovski, Head of Machine Learning at Loka, also stated that interest in Trainium has increased in recent months, partly due to the tight supply of NVIDIA Corporation's GPUs. He added that a customer switched their inference workload to Trainium's second-generation chips after tests showed that the cost of the second-generation Trainium chips could be up to 35% lower than NVIDIA Corporation's H100 series chips. However, Jakimovski added that he still recommends large language model training on NVIDIA Corporation's products. Analog Devices, Inc. (ADI.US) to acquire Empower for approximately $1.5 billion to enhance AI power management product portfolio. American chip manufacturer Analog Devices, Inc. announced that it will acquire Empower Semiconductor for approximately $1.5 billion in cash to expand its focus on AI power management products. The transaction is expected to be completed in the second half of 2026, subject to regulatory approval. Based in Milpitas, California, Empower Semiconductor primarily produces chips for data centers, which reportedly have lower energy consumption and help reduce operating costs. The company announced last September that it had raised over $140 million in funding in a Series D round led by Fidelity Management & Research Company. Alphabet Inc. Class C (GOOGL.US) collaborates with Samsung and Warby Parker to enter the AI audio glasses market, expected to launch in the fall. Alphabet Inc. Class C unveiled its first smart audio glasses for the first time on Tuesday, attempting to break into the wearables market where competitor Meta has already made waves. At the annual I/O developer conference of Alphabet Inc. Class C, the company announced partnerships with Samsung, as well as glasses manufacturers Gentle Monster and Warby Parker, to create smart glasses with an embedded Gemini assistant. Alphabet Inc. Class C stated that the product will be compatible with Android and iOS devices and is expected to be officially released later this year. SpaceX makes frequent moves: 30 days after completing the "largest IPO" in history, may acquire AI coding newcomer Cursor. According to sources, Elon Musk's space exploration company SpaceX plans to advance the acquisition of AI coding startup Cursor 30 days after completing its initial public offering (IPO). Earlier reports indicated that SpaceX could submit its IPO application as early as this Wednesday and officially list on the Nasdaq on June 12th. If all goes according to plan, SpaceX is expected to complete the acquisition of Cursor in July. Sources state that if this deal fails to materialize, SpaceX will need to pay a $10 billion breakup fee to Cursor. Lowe's Companies, Inc. (LOW.US) Q1 earnings beat expectations but cannot hide decline, same-store sales guidance lower than expected, warning of macro headwinds potentially persisting throughout the year. Lowe's Companies, Inc. stated that due to the growth in online sales during the spring season and the boost in demand from professional contractors, the company's first-quarter profit exceeded expectations. However, due to challenges in the macro real estate market, the company maintains its full-year performance outlook. The report showed that Lowe's Companies, Inc. had revenue of $23.1 billion in the first quarter, a 10.4% year-over-year increase, exceeding expectations by $2.2 billion; adjusted earnings per share were $3.03, better than expected. During the quarter, the company's same-store sales grew by 0.6%, but this increase was lower than market expectations. Lowe's Companies, Inc. reiterated its full-year performance forecast and stated that the macro real estate market environment is full of challenges. Demand growth drives performance, Analog Devices, Inc. Q2 profits surge. On Wednesday, Analog Devices, Inc. announced better-than-expected second-quarter results, with strong demand in the industrial, automotive, and communication markets driving revenue growth, and the company expects this trend to continue. Data shows that for the three months ending May 2nd, net profit was $1.18 billion, or $2.40 per share; in comparison, net profit in the same period last year was $569.8 million, or $1.14 per share. Adjusted earnings per share were $3.09, exceeding analyst expectations of $2.88. Revenue increased from $26.4 billion in the same period last year to $36.2 billion, higher than analyst expectations of $35.1 billion. The company expects revenue to be between $3.8 billion and $4 billion in the third quarter, higher than the market's general expectation of $36.1 billion. Adjusted earnings per share are expected to be $3.30 (fluctuating by 15 cents), while analysts expect $2.99. Transformation plan shows results, Target Corporation (TGT.US) Q1 revenue and profits surpass expectations. On Wednesday, the large retail chain Target Corporation announced better-than-expected Q1 performance and raised its revenue guidance, indicating that despite challenges in the macro environment, its transformation plan is progressing smoothly. Data shows that Target Corporation's adjusted earnings per share for the first quarter were $1.71, net sales increased by 6.7% year-over-year to $25.4 billion, surpassing analyst expectations of $1.47 per share and $24.7 billion in sales. The company now expects a net sales growth of approximately 4% for the full year, up two percentage points from the previous forecast. Upcoming important economic data and events 22:30 Beijing time: EIA crude oil inventory changes for the week ending May 15th. 21:15 Beijing time: Speech by Federal Reserve Director Bahr. 02:00 the next day Beijing time: Federal Reserve releases minutes from monetary policy meeting. Earnings forecasts Thursday morning: NVIDIA Corporation, Intuit Inc. (INTU.US) Thursday pre-market: Walmart Inc. (WMT.US), Ralph Lauren (RL.US)