Market Volatility Peaks as US Prepares for Crucial Earnings Reports and Nonfarm Payrolls Data

The US stock market is bracing for a pivotal week of key earnings reports and nonfarm payrolls data. On Monday, August 3, major index futures rose uniformly in pre-market trading: Dow Jones Industrial Average futures were up 1.08%, S&P 500 futures gained 0.64%, and Nasdaq 100 futures advanced 0.32%. Oil prices plummeted as a result of the US President's announcement to cancel a large-scale military strike on Iran, which is expected to lead to an output hike by OPEC+.

New York Fed President Williams stated that current interest rates are well-positioned and that inflation is expected to begin declining in the second half of the year. He noted that if inflation fails to align with expectations, the Federal Reserve may need to act. Meanwhile, Wall Street banks warn that despite a nearly complete deleveraging process, macro risks continue to accumulate.

The era of indiscriminate rallies has come to an end as the US earnings season delivers extreme divergence between 'cash-burning' companies and those generating sustainable returns. This is highlighted by AI-related stocks experiencing sharp volatility, with major Wall Street institutions arguing that this represents a normal consolidation within a long-term bull market.