Preview of US Stock Market | The three major stock index futures fluctuated. The guidance from SandDisk and Western Digital fell short of high market expectations, dragging down the stock prices of storage chip companies.

Pre-market Market Trends 1. On August 6 (Thursday), U.S. stock index futures showed mixed performance ahead of the market open. As of the time of this report, Dow futures were up 0.17%, S&P 500 futures were up 0.10%, while Nasdaq futures were down 0.51%. 2. As of the time of this report, the German DAX index was up 0.16%, the UK FTSE 100 index was up 0.08%, the French CAC 40 index was up 0.58%, and the Euro Stoxx 50 index was up 0.54%. 3. As of the time of this report, WTI crude oil was up 0.89%, priced at $75.89 per barrel. Brent crude oil was up 1.15%, priced at $80.36 per barrel. Market News July's tech stock flash crash leaves "aftereffects"! JP Morgan warns: Hedge funds suffer "structural" blows, tech stocks may become more "retail-driven" and volatile in the future. In the recently concluded month of July, global tech stocks experienced what could be described as a brutal wave of sell-offs. The latest assessment report from JPMorgan indicated that this crash might be profoundly changing the market structure for trading tech stockshedge funds' involvement could see a structural decline, while the influence of retail investors is expected to expand further, which may intensify the volatility of the tech sector. The bank warned that the severe losses in tech stocks during July might force hedge funds to implement stricter risk management frameworks and concentration limits, thereby restricting their ability to hold high-volatility tech stocks. Additionally, major brokerage firms may reduce the balance sheet space allocated to such strategies. The banks strategists wrote: If this assessment proves correct and the exposure of hedge funds to tech stocks experiences structural contraction, tech trading will increasingly rely on retail investors in the long term, making it more susceptible to volatility shocks from leveraged ETFs, retail option buying, and retail financing accounts. Federal Reserve's Daly: Supports maintaining interest rates unchanged in July, but warns of risks of inflation spreading. After the July interest rate meeting, internal policy divisions within the Federal Reserve intensified, with persistent inflation becoming a significant concern for policymakers. San Francisco Fed President Mary Daly stated on Wednesday that she supports the Fed's decision last week to keep rates unchanged but warned that high inflation could be a broader issue requiring more aggressive action from policymakers. She believes there are two possible scenarios for inflationone where inflation begins to cool, and another where price pressures continue to escalate, requiring different policy responses: The solution is to closely monitor incoming information and be fully prepared to take action. She warned that the second scenario is becoming increasingly likely, with rising tariffs, surging energy costs, and ongoing AI investments causing price hikes. In such a case, inflation would become more widespread and persistent, necessitating more aggressive actions from the Fed. Daly emphasized that policymakers should closely watch the likelihood of this second scenario and monitor relevant data in the coming weeks. U.S. layoffs in July hit a two-year low, while offline hiring demand remains strong! According to a new report released on Thursday by global job transition firm Challenger, the number of layoffs announced by U.S. employers in July was 33,429, a significant decrease from Junes approximately 46,000, marking the lowest monthly figure in nearly two years. Meanwhile, corporate hiring enthusiasm is rising, with July hiring plans reaching their highest point for the same period since 2022. Despite the rapid reshaping of the tech industry by AIwhere the technology sector continues to be a major layoff hotspot, accounting for nearly one-third of this year's total layoffsthe strong demand in manufacturing and offline service industries is sustaining the job market. Currently, the market's focus has shifted towards the upcoming July non-farm payroll report set to be released on Friday. The market generally expects around 83,000 new jobs to be added, with the unemployment rate likely remaining at a low 4.2%. JP Morgan CEO Dimon warns: Market leverage is "quite high," hidden borrowing could trigger volatility. Jamie Dimon, CEO of JPMorgan Chase, recently warned that the leverage level in the current financial market remains elevated and cautioned investors that hidden borrowing might exacerbate market volatility. He stated: The amount of margin debt has reached a historical high. Furthermore, there is a significant amount of borrowing not captured by margin debt, existing under other names. This type of leverage includes both hidden and public forms. He further pointed out that these borrowing channels encompass areas such as prime brokerage services, hedge funds, exchange-traded funds (ETFs), and treasury arbitrage strategies, adding: Overall, the level of market leverage is quite high. Dimon noted that a high-leverage environment increases the likelihood of a single investor or fund triggering broad market volatility. In this situation, the probability of some entity rapidly disrupting the market and causing investor panic is indeed higher. Traders are "playing with fire": Oil prices fall, yet oil becomes scarcer! The global crude oil market is caught in a fierce battle between "optimistic expectations" and "harsh realities." As of August 6, Brent crude prices have dropped from a peak of $100 per barrel in late July to below $80. The recovery of market confidence is primarily due to diplomatic signals. According to several officials from the U.S., Iran, and Gulf countries, the parties are nearing an agreement that could restore partial traffic through the Strait of Hormuz, a global energy chokepoint. However, in this game in which traders are placing high hopes, the reality is far harsher than during the failed ceasefire agreement in mid-June. Currently, the premium for Brent crude for October delivery over November contracts has surged to $1.5, clearly illustrating a significant scarcity in the spot market. Even if crude oil supply can partially recover, the crisis in the refined oil market has not subsided. Global oil product inventories have been depleted during the summer consumption peak due to prolonged turmoil, with the situation for diesel being the most severe. Stock News SanDisk (SNDK.US) Q4 results exceed expectations across the board, but Q1 guidance falls short of the most optimistic market expectations, causing the stock price to decline. The financial report shows that SanDisk's revenue in the fourth quarter rose 372% year-over-year to $8.97 billion, better than the market expectation of $8.39 billion; adjusted earnings per share were $39.25, surpassing the market expectation of $34.45. The rapid penetration of generative AI and AI agents has been driving increased demand for SanDisk's enterprise-grade SSDs and NAND flash chips. Revenue from the data center business in the fourth quarter doubled sequentially to $2.98 billion, demonstrating that the growth core has shifted from traditional mobile and PC flash to AI infrastructure. Despite the fourth quarters results exceeding expectations, the company expects first-quarter revenue to be between $10.3 billion and $10.8 billion, with the midpoint indicating expected year-over-year growth of 359%. The midpoint is above the analyst average expectation of $10.47 billion based on LSEG compiled data; however, analysts from other data operators consensus expect SanDisk's midpoint to be about $10.55 billion, nearly $5.5 billion below the consensus expectation of $11.16 billion. The company also expects quarterly adjusted earnings per share to be between $4.40 and $4.60, with the midpoint at $4.50, slightly below the market consensus expectation of around $4.58. As market expectations tighten, failing to meet the fervent market expectations led to a steep post-earnings decline for the stock. As of the time of this report, SanDisk was down more than 9% in pre-market trading on Thursday. Western Digital Corporation (WDC.US) reports and guidance both exceed expectations, but expectation cliff leads to a sharp post-earnings drop in stock price. The financial report shows that Western Digital Corporation's net revenue in the fourth quarter increased by 44% year-over-year to $3.75 billion, exceeding the market expectation of $3.68 billion; adjusted earnings per share (EPS) were $3.56, above the market expectation of $3.31. The company also provided a strong outlookexpecting first quarter revenue between $4.0 billion to $4.2 billion, and the midpoint of this forecast exceeds the market expectation of $4.06 billion. Although Western Digital Corporations results highlight the near "endless" explosive demand for high-capacity HDDs from global tech companies, the stock price had already risen approximately 201% year-to-date prior to the earnings release, reflecting market pricing in advance for HDD shortage expectations. Furthermore, while Western Digital Corporation's outlook surpassed the analyst baseline, it did not provide a more aggressive long-term supply, order lock-in, and profit outlook like Seagate, thus appearing relatively cautious in comparison. This so-called "expectation cliff" indicates that while earnings and guidance exceeded market consensus, they did not meet the higher thresholds demanded by excessively crowded positions, leading to a loss of confidence and a dramatic drop in asset prices even when overall growth remained. As of the time of this report, Western Digital Corporation was down nearly 16% in pre-market trading on Thursday. Storage chip stocks fell sharply pre-market. On Thursday pre-market, dragged down by the declining stock prices of SanDisk and Western Digital Corporation, as of the time of this report, SK Hynix (SKHY.US) was down more than 6%, Micron Technology, Inc. (MU.US), and Seagate Technology Holdings PLC (STX.US) were both down more than 4%. AppLovin (APP.US) revenue surged 53% but was still hit hard! This was simply due to the AI model upgrade being slightly behind schedule. The financial report shows that for the second quarter ending June 30, AppLovin generated revenue of $1.92 billion, a 53% year-over-year increase, yet still below the broadly expected $1.94 billion; net profit climbed 55% year-over-year to $1.27 billion; adjusted EBITDA increased by 58% year-over-year to $1.61 billion; adjusted earnings per share were $3.76, slightly exceeding market consensus of $3.75. Despite delivering impressive profit growth, AppLovin faced a cold reception from investors. In addition to the second-quarter revenue being slightly below expectations, the guidance for the next quarter was not inspiring the company forecasts third-quarter revenue in the range of $2.055 to $2.085 billion, with the midpoint of $2.07 billion slightly below the consensus estimate of $2.08 billion. Moreover, co-founder and CEO Adam Foroughi admitted that the company's game-focused advertising business is highly dependent on the performance improvement of its AI model. Each substantial iteration of the model allows advertisers to invest more budget while maintaining targeted advertising expenditure return rates. However, in the recently concluded second quarter, that leap in model performance did not arrive as expected. As of the time of this report, AppLovin was down over 18% in pre-market trading on Thursday. Middle East turmoil generates enormous profits! Oil prices soared 19% combined with rising production, as Occidental Petroleum Corporation (OXY.US) posts its highest Q2 profits in four years. The financial report shows that Occidental Petroleum Corporation's Q2 revenue reached $8.32 billion, a 57.0% year-over-year increase, exceeding expectations by $1.07 billion; adjusted earnings per share were $2.40, surpassing expectations by $0.55. In the three months ending June 30, the price of crude oil produced by Occidental Petroleum Corporation soared over 50% year-over-year to $96.78 per barrel. Global average production increased by 2.4%, reaching 1.43 million barrels of oil equivalent per day, primarily driven by strong performance in the U.S. However, Occidental Petroleum Corporation's international assets located in Algeria, Oman, Qatar, and the UAE saw production decline by 12% to 205,000 barrels of oil equivalent per day, due to repeated conflicts and attacks on energy infrastructure in the Middle East, which has heightened tensions in this crucial oil-producing region. The company now forecasts capital expenditures for 2026 to be between $5.5 billion and $5.9 billion, down from previous estimates of $6.3 billion to $6.7 billion. As of the time of this report, Occidental Petroleum Corporation was up nearly 2% in pre-market trading on Thursday. Strategic transformation continues to advance, with advertising giant WPP (WPP.US) reporting revenue and profit declines in H1 but exceeding expectations. WPP's first-half profit surpassed analyst expectations, primarily due to cost-cutting measures implemented by the advertising agency in a market downturn. The financial report shows that operating profit for the period decreased by 3.4% to 398 million ($536 million), better than the analyst average expectation of 347.2 million; revenue excluding pass-through costs fell by 5.6% to 4.75 billion, surpassing the analyst average expectation of 4.65 billion. WPP also plans to achieve annual cost savings of 500 million over the next few years and reinvest those savings into growth areas. As part of its strategic transformation, WPP announced at the beginning of July the expansion of its AI-focused business unitWPP Enterprise Solutions. This unit will launch a series of AI-centric business offerings, covering areas such as AI transformation consulting, smart agency e-commerce, customer data management, user loyalty operations, and content automation. As of the time of this report, WPP was up more than 25% in pre-market trading on Thursday. After regulatory setbacks, Moderna (MRNA.US) finally gains approval for its first mRNA flu vaccine. After facing opposition from the U.S. Food and Drug Administration (FDA), Moderna's mRNA-based flu vaccine mFLUSIVA has finally received approval for market release, marking a significant victory for the company. Moderna stated in a statement that mFLUSIVA has been approved for adults aged 50 and older. This is the first mRNA flu vaccine approved in the U.S. and the fifth product approved for Moderna globally, being the fourth approved product by the FDA in the U.S. The mFLUSIVA mRNA flu vaccine is an essential component of Modernas growth plan. As demand for its COVID-19 vaccine, which helped boost the companys profile during the pandemic, gradually wanes, Moderna is seeking new growth drivers. As of the time of this report, Moderna was up nearly 4% in pre-market trading on Thursday. Important Economic Data and Events Forecast At 20:30 Beijing time: U.S. initial jobless claims for the week ending August 1. At 05:30 the next day: 2028 FOMC voter, St. Louis Fed President Bullard speaks on the U.S. economy and monetary policy. Earnings Forecast Friday morning: Airbnb, Inc. Class A (ABNB.US), Roku (ROKU.US) Friday pre-market: China Yuchai International Limited (CYD.US)