US Stock Market Pre-market Outlook | All Three Major Index Futures Rise, Chip Stocks and Optical Communication Stocks Surge Pre-market, ARM (ARM.US) Up Over 4%

Pre-market Market Movements

1. Before the US stock market opens on Friday, September 25, all three major US stock index futures are rising. As of press time, Dow futures are up 0.41%, S&P 500 index futures are up 0.40%, and Nasdaq futures are up 0.73%.

US chip stocks and optical communication stocks are surging pre-market. ARM is up more than 4% after falling nearly 8% yesterday. SanDisk is up more than 2%. AMD, SK Hynix, and Western Digital are up nearly 2%. Micron Technology and Intel are up about 1%. Optical communication stocks are also soaring, with Coherent up nearly 3%, Lumentum and Marvell Technology up about 2%, and Corning and Applied Optoelectronics up nearly 2%.

2. As of press time, Germany's DAX index is up 0.83%, the UK's FTSE 100 index is up 0.32%, France's CAC40 index is up 0.27%, and the Euro Stoxx 50 index is up 0.82%.

3. As of press time, WTI crude oil is down 2.42%, at $92.32 per barrel. Brent crude oil is down 1.67%, at $104.82 per barrel.

Market News

The Federal Reserve plans to raise bank regulatory thresholds. According to sources, the FED is drafting a plan to raise the asset thresholds that trigger stricter supervision for large banks. This move would exempt some lenders from costly extra regulatory burdens and could encourage industry consolidation. The Federal Reserve is expected to soon propose recalibrating thresholds for banks subject to balance sheet stress tests, liquidity, capital, and other stricter regulations, reflecting inflation and economic growth factors. Three insiders say the Fed is expected to announce these proposals later this year.

The Bank of Japan's inflation indicator accelerates, providing grounds for further rate hikes. The Bank of Japan's measure of underlying inflation accelerated last month and is well above the target level, providing a basis for continued hikes in benchmark rates. A report released by the Bank of Japan on Friday showed that consumer prices (CPI), excluding fresh food and special factors, rose 2.6% year-on-year in August, up from 2.3% in July. Special factors include government subsidies for gasoline and utilities. The figure excluding fresh food, energy, and special factors rose from 1.6% in July to 1.8%.

Goldman Sachs Asset Management underweights large cloud service providers, expects bond issuance spree to continue. Goldman Sachs Asset Management currently underweights the largest AI-sector borrowers as a flood of new debt comes to market, and expects major cloud service providers to make big bond issuances. Lindsay Rosner, head of multi-sector fixed income at Goldman Sachs Asset Management, said in an interview Thursday: "We believe the hyperscale cloud service providers will issue a large number of bonds. We're underweight the sector overall because we know more supply is coming." Rosner said, "This has been the story all year, with new bond issues replacing existing ones."

The yen is set for the biggest one-day gain in over two weeks. On Friday, the yen rose as much as 0.6% to 157.95 yen per dollar, the best performer among G10 currencies. Japanese Finance Minister Kaoru Katayama said US President Trump expressed concerns over yen depreciation during his meeting this week with Prime Minister Sanae Takamichi; Takamichi responded that yen undervaluation is a problem. Katayama revealed some details of their conversation after consulting the Prime Minister's Office and said Japan will continue close communication with US Treasury Secretary Bessent on a range of topics, including foreign exchange.

Wall Street faces a new interest rate paradigm: 5% US Treasury yields may become standard, or even the floor. As US Treasury yields repeatedly break new highs, Wall Street and Washington are increasingly seeing this not as a temporary market decline, but as a fundamental shift. Multiple factors are raising the US government's borrowing costs, including $100-per-barrel oil, the AI investment boom, and the nation's massive budget deficit, which has pushed debt to a record $40 trillion. Meanwhile, the Federal Reserve remains committed to curbing inflation, which has run above target for years. Now, nearly all US benchmark Treasury yields hover around or above 5%, with the five-year Treasury yield topping 5% for the first time since 2007 on Wednesday.

El Niño disrupts palm oil: Indonesia and Malaysia 2027 output expected to drop 3%, prices may head to $1,226. Prolonged drought caused by strong El Niño is expected to depress yields next year, causing palm oil output in Indonesia and Malaysia to fall in 2027, tightening global supply and pushing prices higher. Based on a median of forecasts from seven analysts, combined output from the world's two largest palm oil producers will fall by about 3%. Indonesia’s output is seen slipping to 49 million tons, while Malaysia’s drops to 19.5 million tons. Analysts said that, in addition to Indonesia's expanding biodiesel mandate and declining yields from aging trees, persistent drought could limit supply and drive benchmark palm oil prices up to 5,000 ringgit ($1,226) per ton in 2027.

Stock News

Costco (COST.US) Q4 revenue and profit exceed expectations, paid membership growth misses estimates. After the US market closed on Thursday, Costco announced its results for the fourth quarter of fiscal 2026 ended August 30. Costco’s Q4 total revenue grew by 11% year-on-year to $95.72 billion, beating market expectations; adjusted earnings per share were $6.57, also beating expectations, with a tariff refund contributing $0.15 per share. Data also showed membership fee income rose 7% to $1.85 billion, slightly above expectations. However, paid membership growth was lower than expected during the period. The company's share price changed little in after-hours trading. Executives said during Thursday's analyst call that Costco's gas and travel businesses performed well, while home goods, small electronics, and beauty products also contributed to sales growth. Adjusted same-store sales rose 6.7% for the quarter, exceeding forecasts.

Tesla (TSLA.US) officially announces mass deliveries of the Semi electric truck, reaffirming annual target of 50,000 units. On September 25, Tesla (TSLA.US) announced the launch of mass deliveries of its Semi electric truck. Tesla executives said at the Sparks, Nevada factory that deliveries to the first customers would begin this week, nearly nine years after CEO Elon Musk first unveiled the electric big rig. The Semi is designed for long-haul logistics, expanding Tesla from electric sedans and SUVs into the commercial trucking sector. The company did not disclose production plans or pricing for the Semi but reiterated its intention to produce 50,000 units annually at the Nevada factory.

Up to 7,000 yuan off, Tesla (TSLA.US) launches another price cut promotion. Tesla has announced its latest incentive policy. Place an order for any Model 3 by October 31, 2026 (inclusive) and immediately get 5,000 yuan off the final payment; selected Model Y variants get 7,000 yuan off. Customers can also choose one of three “combo” benefits: five years of zero interest, 8,000 yuan off on limited-time paint upgrades, or exclusive charging benefits. In addition, some Model 3 vehicles are eligible for an 8,000 yuan insurance subsidy. With all incentives applied, Model 3 prices start at 222,500 yuan and Model Y prices at 256,500 yuan.

Musk reveals Colossus 2 expansion timeline: NVIDIA (NVDA.US) chip count may more than double by year-end. Elon Musk stated that the Colossus 2 AI compute cluster built by his AI company xAI could have more than double the number of NVIDIA (NVDA.US) chips by the end of the year. xAI is now part of SpaceX (SPCX.US). Musk is accelerating the expansion of computing power. He posted on X that Colossus 2 currently has 110,000 NVIDIA GB200 chips and 440,000 GB300 chips. He added that next week, another 220,000 GB300 chips will be deployed, and a further 220,000 are expected to come online in November. If "luck holds," another 220,000 chips might launch by the end of December.

Key Economic Data & Event Preview

20:30 Beijing time: US August durable goods orders month-on-month

22:00 Beijing time: US final September University of Michigan consumer sentiment index