U.S. Stock Market Outlook | Dow Futures Turn Positive, Wall Street Remains Confident in the "Long-Term Bull Market Narrative"

1. As of October 17 (Friday) before the US stock market opens, the three major US stock index futures showed mixed results. At the time of publication, the Dow futures turned from a decline to an increase, rising by 0.18%, the S&P 500 index futures fell by 0.04%, and the Nasdaq futures dropped by 0.24%.

1. As of the time of publication, the German DAX index fell by 1.48%, the UK FTSE 100 index dropped by 1.05%, the French CAC40 index decreased by 0.05%, and the European Stoxx 50 index fell by 0.66%.

1. As of the time of publication, WTI crude oil rose by 0.21%, priced at $57.58 per barrel. Brent crude oil increased by 0.16%, priced at $61.16 per barrel.

Market News

$5 trillion "credit powder keg" raises alarm? JP Morgan president warns that defaults could trigger a systemic crisis. John Waldron, president of Goldman Sachs Group, stated that the scale of credit has seen explosive growth over the past decade, and if the situation worsens, the resulting chain reactions will be grim. Waldron pointed out that the total borrowing in the high-yield bond, leveraged loan, and private credit sectors has reached approximately $5 trillion, with private credit being the main driving force behind the growth. Over the past decade, the scale of credit issuance has surged significantly, mainly concentrated in the private credit sector—there has been some growth within the banking system, but the vast majority comes from private credit. In recent weeks, the credit market has faced three suspected fraud incidents, heightening concerns about potential deep-seated risks. On Thursday, Zion Bank and Western Alliance Bank both reported that loans issued to funds investing in poor commercial mortgages were subject to fraud, making them victims themselves.

Liquidity alarm sounded! US bank reserves fall below $3 trillion again, and the Fed's QT may end in the coming months. The reserves of the US banking system (a key consideration for the Federal Reserve's decision to continue reducing its balance sheet) have once again fallen below $3 trillion. Meanwhile, Federal Reserve Chairman Jerome Powell signaled that quantitative tightening (QT) may stop in the coming months. According to data released by the Federal Reserve on Thursday, bank reserves decreased by approximately $45.7 billion in the week ending October 15, dropping to $2.99 trillion. This decline nearly offsets the previous week's increase of $54.3 billion. The background for this decrease in reserves is that, following the debt ceiling increase in July, the US Treasury has ramped up bond issuance to rebuild cash balances. This operation drains liquidity from other liability items in the Federal Reserve's accounts, such as the Fed's overnight reverse repurchase tool and bank reserves Profit is king, AI leads the way! The U.S. stock earnings season kicks off with a bang, and Wall Street increasingly believes in the "long-term bull market narrative." As concerns about the global macroeconomic instability, dominated by the U.S. government shutdown and the debt crisis in developed countries, intensify, and the dominance of massive investments in artificial intelligence may obscure deeper issues beneath the surface of the U.S. economy, Wall Street analysts are becoming more optimistic about the profit outlook for U.S. companies. Coupled with the momentum of exceeding performance expectations this year, the bullish trend in the U.S. stock market may continue to thrive for the long term. The earnings disclosure season for U.S. stocks is crucial, and based on the latest general expectations from Wall Street and disclosed performances, the "seven major tech giants" that hold significant weight in the S&P 500 index, along with leaders in the AI computing power supply chain like Broadcom and AMD, are expected to deliver strong performances, driving the U.S. stock market to new highs.

"Digital gold" loses its luster! Bitcoin plummets again, losing its "safe-haven" halo, with market value evaporating by hundreds of billions in a week. After experiencing a week-long plunge and a market value loss of hundreds of billions, Bitcoin has once again failed to deliver on its promise as a safe-haven asset. This native cryptocurrency, hailed as a tool for hedging against market turmoil—the "digital gold" of the blockchain era—continued its downward trend during Friday morning trading in London. Its price fell by as much as 3% to below $105,000. The second-largest token, Ethereum, dropped below $3,800, retreating over 20% from its August peak. Meanwhile, the BNB token associated with Binance plummeted by 11% on Friday. From October 10 to 11, due to users encountering technical issues and price discrepancies, this largest global cryptocurrency exchange was deemed by analysts to be the main driver behind a record liquidation wave. Following the crash, Binance has provided nearly $600 million in compensation to users and businesses.

Individual Stock News

North American demand rebounds + acquisition benefits, Schlumberger (SLB.US) Q3 profits exceed expectations. Due to stable demand in the North American market and the business contributions from the recent acquisition of ChampionX, which effectively offset the weak activity in oilfield operations in other regions, the world's largest oilfield services company, Schlumberger, reported third-quarter profits that exceeded expectations on Friday. In the third quarter, international business revenue, which accounts for about 80% of Schlumberger's total revenue, fell 7% to $6.92 billion, while North American business revenue grew 14% to $1.93 billion. For the quarter ending September 30, the company's adjusted earnings per share reached $0.69, surpassing the consensus estimate of $0.66 from analysts. Total revenue decreased by 2.5% from $9.159 billion in the same period last year to $8.928 billion, but increased by 4% quarter-over-quarter. Excluding the impact of the acquisition, Schlumberger's global revenue actually declined by 9% year-over-year in the third quarter.

Strong demand for the new platinum card! American Express (AXP.US) Q3 performance exceeds expectations. American Express reported Q3 revenue of $18.43 billion, a year-on-year increase of 10.8%; the non-GAAP earnings per share were $4.14, higher than market expectations. This high-end credit card company reported a third-quarter billing volume of $421 billion. Analysts had previously estimated that the New York-based company's total billing volume would reach $415.2 billion The company's CEO Steve Squeri stated in a statement on Friday that the initial demand for the new Platinum Card has exceeded the company's expectations, with the acquisition of American Platinum Card accounts doubling compared to pre-update levels. The company has also raised the lower limit of its full-year revenue guidance range, now expecting revenue to grow by 9% to 10%, while the market generally expects 8.95%; earnings per share are expected to be between $15.20 and $15.50, with the market generally expecting $15.34.

Increased customer trading volume boosts performance, Interactive Brokers (IBKR.US) Q3 revenue and EPS exceed expectations. Interactive Brokers reported a net revenue of $1.66 billion for Q3, a 21% increase from $1.365 billion in the same period last year, better than the market expectation of $1.505 billion; adjusted earnings per share were $0.57, up from $0.40 in the same period last year, and above the market expectation of $0.54. Due to increased customer trading volume, commission income for the quarter grew by 23% year-on-year to $537 million. Data shows that customer trading volume for stocks and options increased by 67% and 27%, respectively, while customer trading volume for futures decreased by 7%. Net interest income grew by 21% year-on-year to $967 million, due to enhanced securities lending activities, an increase in average customer margin loans, and customer credit balances. Additionally, Interactive Brokers' board announced a quarterly cash dividend of $0.08 per share.

Oracle (ORCL.US) reveals AI "trump card": $60 billion project gross margin can reach 35%, FY2030 revenue target of $225 billion. Oracle announced the expected gross margin for its large AI infrastructure project, alleviating some of Wall Street's concerns about the profitability of this key new business segment. During an investor presentation at its annual conference in Las Vegas on Thursday, Oracle stated that for an AI workload infrastructure project (such as a data center) that generates a total of $60 billion in revenue over six years, the gross margin would reach 35%. Gross margin refers to the percentage of revenue remaining after deducting the costs of goods and services produced. Co-CEO Clay Magouyrk stated during a discussion with analysts that the gross margin level in this example "is meaningful even for the largest customers."

Breaking the high cost of AI infrastructure! Meta (META.US) completes nearly $30 billion data center financing, SPV off-balance-sheet structure becomes a new model for tech giants. Meta, led by Mark Zuckerberg, plans to finalize a nearly $30 billion financing plan for its data center park located in rural Louisiana, marking the final step in the largest private capital transaction in history. According to insiders, Blue Owl Capital and Meta will jointly hold ownership of the "Hyperion" data center park in Richland Parish, Louisiana, with the tech giant retaining only a 20% stake. To support the construction of the park, Morgan Stanley has established a special purpose vehicle (SPV) and arranged over $27 billion in debt financing and about $2.5 billion in equity financing for it—this structure for large transactions is becoming increasingly common

Important Economic Data and Event Forecast

Beijing time 20:30: U.S. September building permits month-on-month initial value (%), U.S. September import price index month-on-month (%), U.S. September new housing starts annualized month-on-month (%).

Beijing time 21:15: U.S. September industrial production month-on-month (%).

Next day Beijing time 01:00: U.S. total number of active drilling rigs as of the week ending October 17 (units).

Next day Beijing time 04:00: U.S. August net foreign purchases of long-term securities (hundred million USD).

Next day Beijing time 00:15: 2025 FOMC voting member, St. Louis Fed President James Bullard speaks.

Next day Beijing time 03:30: CFTC releases weekly positions report