Saved at 4:01 AM

Source: Wall Street Intelligence Circle

Before the dust settles tonight at 20:30 (UTC+8), any intraday rebounds or declines are highly deceptive.

Saved.

After the US stock market closed (04:01 am UTC+8), Micron delivered an almost flawless report card.

Micron's adjusted EPS for the third fiscal quarter was $25.11, far exceeding the market expectation of $20.49; revenue was $41.46 billion, also significantly higher than Wall Street’s forecast. Even more remarkable was the gross margin, which reached 84.9%, nearly doubling year-on-year.

Wall Street’s biggest worry was that “AI is cooling off,” but Micron told the market this concern was overblown in the preceding days. After-hours, Nasdaq futures surged over 2%. Micron shares also quickly rebounded more than 10% in after-hours trading, nearly recovering losses from the past two days.

First, judging by US stock index futures’ performance after Thursday’s opening, the movement has been somewhat restrained—S&P 500 futures were even declining, with many hedge funds opting to close their positions. No matter how strong Micron’s financials are, it’s just one company. The real issue now is that the valuation of the whole US market (especially the S&P 500) has reached a point where it can’t tolerate even the slightest macroeconomic flaw. Micron vindicated itself last night, but it cannot assure the market about the AI monetization efficiency of others (such as Microsoft, Google, etc.). Micron is “selling shovels”—Microsoft and Google are “mining for gold.” Selling shovels can be profitable, but that doesn’t mean all those panning for gold will succeed.

Second, before Micron’s earnings release, the global market was not in a “dollar up, everything else down” mode. US Treasury bonds had already started quietly rising (10-year yields fell below 4.4%)—because the drop in oil prices led the market to reconsider whether the Fed actually needs to raise rates. Although the market has started to lower its rate hike expectations, it hasn’t truly entered the “broad risk appetite resurgence” phase.

Third, Micron’s impressive earnings gave tech stocks a much-needed boost, stabilizing the broader market, at least temporarily. But whether the rebound can be sustained today does not actually depend on tech stocks; the driving force lies in tonight’s 20:30 (UTC+8) release of the May US PCE inflation data. After the “breakdown,” bearish sentiment hasn’t been fully released—it’s just been forcefully blocked by Micron’s results. If PCE doesn’t cooperate, however aggressively the bulls push up at the opening, that’s how hard they might get hit by the close.

Micron provides the rescue; PCE sets the direction.