US Stock Market Preview: Major Index Futures All Rise, Most Tech Stocks Gain, Gold Approaches $4,600

Pre-market Market Moves

1. On Friday, August 21, ahead of the U.S. market open, the three major U.S. stock index futures all rose. As of press time, Dow futures were up 0.52%, S&P 500 index futures were up 0.48%, and Nasdaq futures were up 0.74%.

2. As of press time, Germany's DAX index was up 0.20%, the UK's FTSE 100 index was up 0.20%, France's CAC40 was up 0.15%, and the Euro Stoxx 50 was up 0.31%.

3. As of press time, WTI crude oil was down 0.44%, at $86.45 per barrel. Brent crude oil fell 0.38% to $93.42 per barrel.

Market News

US Treasury looking to spend big to rescue Treasuries, while Goldman Sachs prescribes “core solution”: Easing inflation is the key. Goldman Sachs strategist Friedrich Schapell noted in a report that unless the underlying macro drivers change, the impact of an expanded buyback program would likely be “relatively short-lived.” Schapell believes that while the US Treasury is doing all it can to curb rising borrowing costs, cooling inflation remains the most convincing way to lower bond yields. Recently, fundamentals including weaker-than-expected retail sales, disappointing jobs data, and subdued core inflation in July provide some encouragement, but market pricing remains divided. Schapell wrote, “We believe the continued accumulation of moderate inflation data will boost confidence in the Fed keeping its benchmark rate unchanged, and will shift risk preference, which is currently the clearest path to lower yields.”

UBS raises S&P 500 earnings forecast, bullish on continued bull market. UBS has raised its outlook for S&P 500 earnings and target levels, citing improved corporate earnings prospects and growing confidence in economic growth next year. The bank now expects S&P 500 EPS to be $350 in 2026 and $400 in 2027, up from prior forecasts of $335 and $375, representing growth rates of 25% and 14% respectively. At the same time, UBS raised its S&P 500 target to 8,100 points for December 2026 and to 8,400 points for June 2027. The upgrade was mainly driven by stronger-than-expected earnings in semiconductors, technology hardware, and energy sectors, though earnings expectations for almost all market sectors were revised higher to varying degrees. UBS notes the breadth of the latest rally continues to widen, with an exceptionally strong Q2 earnings season, and improving economic conditions in cyclical sectors such as manufacturing activity and construction employment.

Former Fed “Number Three”: U.S. stock market bubble may burst before the end of next year. Former New York Fed President Bill Dudley said U.S. equity valuations are clearly in bubble territory. He warned that once the AI investment cycle slows, the current drivers of the rally—profits, margins, and funding—could all reverse simultaneously. He expects this bubble may burst before the end of 2027. Dudley pointed out that multiple measures have already indicated overvaluation in US stocks, but also emphasized that high valuations don’t mean the bubble will burst right away. Bubbles often continue to inflate, as rising asset prices encourage more investment and earnings growth, reinforcing investor optimism. The risk is that this positive feedback could eventually reverse. The most critical inflection point comes from AI capital spending. Once the pace of AI spending slows, upstream “pick-and-shovel” companies will be hit first: with slower demand growth, declining profit expectations, and shrinking margins, ultimately forming a “double whammy” of lower valuations and earnings.

US Treasury’s “buying bonds to lower rates” could hurt the dollar? Citi sharply cuts three-month dollar forecast, says not recommended to be long before mid-term elections. As markets gradually digest expectations for a more dovish Fed, mid-term election factors, and news of a potentially larger Treasury buyback program, Citi’s FX strategy team has recently turned bearish on the short-term outlook for the dollar. Led by Daniel Tobon, Citi strategists lowered their three-month dollar index forecast from 102.12 to 98.34 in a research note on Thursday. Citi has warned that US Treasury Secretary Scott Besent’s latest efforts to lower long-term borrowing costs could come at the expense of a weaker dollar. Strategists noted, “The latest variable is the Treasury’s announcement to double buyback size before November. This adds two new headwinds for the dollar: first, lower Treasury yields; second, market concern over financial repression policies.”

Gold heads for third straight weekly gain, new bull market sentiment takes off! As of press time, spot gold was up 1.70% to about $4,597/ounce, briefly breaking above $4,600/ounce intraday, and is set for a third consecutive week of gains. For gold, this precious metal is benefiting from the US government’s buybacks of 10-year and longer-dated treasuries through a “dual-path benefit” structure—if risk-free yields fall, holding gold gains from lower opportunity cost, while yield distress rewards gold through higher credit premiums. Regarding expectations for a new gold bull market, the truly significant impact comes from shifting market expectations for Fed and US government policy response functions: once investors believe authorities will use larger dollar injections, lower real rates or more aggressive debt maturity management to prevent long-end funding costs from spiraling, gold’s price distribution under a weaker dollar and cascading 10-year risk-free rates will gain an obvious upside skew.

Stock News

Most US tech stocks climb. On Friday before the open, optical communication stocks broadly rallied. As of press time, Coherent (COHR.US), Lumentum (LITE.US), Astera Labs (ALAB.US), and Nokia (NOK.US) were all up over 2%; Credo Technology (CRDO.US) and Corning (GLW.US) were up nearly 2%, and Marvell Technology (MRVL.US) was up over 1%. The “Magnificent Seven” all rose, although gains were all less than 2%. Memory chip stocks also climbed, with SK Hynix (SKHY.US) up over 2%, and Micron Technology (MU.US), Seagate Technology (STX.US), and Western Digital (WDC.US) all up over 1%.

Discount retail resilience highlighted! Ross Stores (ROST.US) raises full-year profit guidance for second time, same-store sales notch longest streak in nearly five years. Ross Stores raised its annual profit forecast for the second time this year, signaling ongoing strong momentum. The report showed Ross Stores’ Q2 revenue reached $6.3 billion, up 13.9% year-on-year, $140 million above expectations; earnings per share were $2.66, $0.71 above estimate. While Q2 profit included about $0.60 per share from a tariff refund, same-store sales were still up 10%. This marks the second straight quarter of double-digit same-store sales growth, the first such streak in nearly five years. The company now expects full-year EPS of $8.61 to $8.77, above prior guidance of $7.50-$7.74 and ahead of Wall Street consensus. The new midpoint implies 31% year-on-year growth, the strongest since 2022. Ross Stores did not issue full-year same-store sales guidance, but expects Q3 to rise 6-7% and Q4 to grow 4-5%, both above analyst targets. As of press time, Ross Stores was up over 8% in pre-market Friday trading.

Up to $100 billion! Broadcom (AVGO.US) reportedly brewing massive AI chip financing to challenge Nvidia (NVDA.US) dominance. Broadcom is negotiating with multiple lenders over a massive AI chip financing plan worth over $60 billion in debt, intended to provide chip and data center infrastructure funding for AI companies such as Anthropic. Sources said that if the subordinated debt portion under discussion is included, the plan could reach as much as $100 billion. This would be another mega-deal in the AI infrastructure financing boom. For Broadcom, the arrangement will help expand sales of its AI chips and other data center equipment, and further contest Nvidia’s leadership in the AI computing market.

SK Hynix (SKHY.US) reportedly plans tens of trillions of won investment in Japan plant, could mark first large Korean chip investment in Japan. Foreign media reported Friday, citing industry sources, that SK Hynix is considering building a memory chip production facility in Miyagi Prefecture, Japan, with an investment that could reach tens of trillions of won. This move is aimed at expanding capacity in the face of continued strong global demand for memory chips. Although tens of trillions of won is a huge sum, it is smaller than SK Hynix’s investment of hundreds of trillions of won in Korean cluster areas such as Yongin and Honam; thus, the Miyagi plant’s production scale is expected to be relatively small. Analysts believe the plant would serve as a new overseas manufacturing base, complementing SK Hynix’s home operations in Korea. If carried out, it would be the first major Korean semiconductor manufacturing investment in Japan.

Key Economic Data and Event Preview

21:45 Beijing time: US August SPGI Manufacturing PMI preliminary