US Stock Market Outlook: Uncertain US-Iran Relations, Warner Bros Deal Finalized, Block Soars 18%

US-Iran Negotiations and Market Reactions

The key negotiations between the US and Iran concluded on Friday without an agreement, with discussions set to continue next week.

Market Overview

US stock futures showed weakness across the board, with the Dow futures down 0.66%, Nasdaq futures down 0.44%, and S&P 500 futures down 0.45%.

Pre-Market Movements

• Tech Stocks: Most major tech stocks fell, with Broadcom (AVGO) down nearly 2%, Micron Technology (MU), ASML (ASML), and Microsoft (MSFT) down over 1%, and AMD (AMD) and Meta Platforms (META) down nearly 1%.

• Chinese Stocks: Mixed performance for popular Chinese stocks, with Alibaba (BABA), Xpeng Motors (XPEV), and Li Auto (LI) down over 1%, while Pony.ai (PONY) rose nearly 4%.

Notable Company Updates

• Paramount Skydance: Announced an acquisition offer of $31 per share, totaling approximately $81 billion, surpassing Netflix (NFLX) in a bidding war for Warner Bros Discovery (WBD). Netflix's stock surged over 8% after it withdrew from the bidding, citing financial concerns.

• Block: Shares rose over 18% after announcing significant layoffs due to AI efficiency improvements, while projecting a gross profit of $10.36 billion for 2025, a 17% increase year-over-year.

• Dell Technologies: Stock increased over 11% after reporting record revenue and profits, with AI server revenue expected to double by 2027.

• Applied Optoelectronics: Shares surged over 20% after narrowing Q4 losses and exceeding revenue expectations.

• MARA Holdings: Stock jumped 17% as it partnered with Starwood Capital to transform existing sites for AI infrastructure.

• CoreWeave: Shares fell nearly 11% after providing disappointing Q1 revenue guidance.

• Duolingo: Stock plummeted 25% despite exceeding Q4 earnings expectations, due to disappointing 2026 revenue forecasts.

• Rocket Lab: Shares dropped over 5% after announcing delays in the Neutron rocket launch.

Economic Updates

US PPI Data Release

The US will release the latest Producer Price Index (PPI) data at 9:30 PM Beijing time, which is expected to provide insights into inflation trends.

China’s Central Bank Announcement

The People's Bank of China announced a reduction in the foreign exchange risk reserve ratio from 20% to 0%, effective March 2, 2026, aiming to stabilize the RMB exchange rate.

Market Sentiment on AI and Employment

Morningstar criticized the narrative that AI is primarily for layoffs, suggesting that redeploying employees could enhance productivity instead.

Investor Insights

Oaktree Capital's Howard Marks noted that AI is evolving into a substantial labor replacement tool, advising investors to select stocks carefully and maintain moderate positions.

Foreign Investment Trends

Foreign funds sold a record 6.8 trillion KRW (approximately $4.7 billion) in South Korean stocks in a single day, while local investors showed net buying behavior.