Wall St mixed, chip majors wobble after China sales deal
Nvidia (NVDA.O), opens new tab and Advanced Micro Devices (AMD.O), opens new tab reversed premarket losses and were last up 0.2% and 2.6%, respectively, in volatile trading. A U.S. official told Reuters the semiconductor majors had agreed to give the United States government 15% of revenue from sales of their advanced chips to China.
Analysts said the levy could hit the chipmakers' margins and set a precedent for Washington to tax critical U.S. exports, potentially extending beyond semiconductors.
"A lot of people are not sure what to make of that because this is the first time in history that it's ever happened where an administration wants a percentage of the profits from a publicly traded company," said Michael Matousek, head trader at U.S. Global Investors Inc.
Enabling semiconductor sales to China was an integral issue in the agreement Washington and Beijing signed earlier this year, which expires on Tuesday. U.S. President Donald Trump lauded China's cooperation in talks at a White House news conference earlier on Monday.
At 11:59 a.m. ET, the Dow Jones Industrial Average (.DJI), opens new tab fell 91.43 points, or 0.21%, to 44,084.19, the S&P 500 (.SPX), opens new tab gained 6.87 points, or 0.11%, to 6,396.39, and the Nasdaq Composite (.IXIC), opens new tab rose 60.17 points, or 0.28%, to 21,510.19.
Six of the 11 major S&P 500 sectors slipped, while healthcare (.SPXHC), opens new tab gained 0.4%, recovering some of the 5% declines it had logged so far this year.
Traders took a step back after last week's rally helped the S&P 500 (.SPX), opens new tab and the Nasdaq (.IXIC), opens new tab log their strongest weekly performance in more than a month. On Monday, the tech-heavy Nasdaq was on track for its third consecutive record closing high, if gains hold.
Investors expect that the recent shakeup at the U.S. Federal Reserve and signs of labor market weakness could nudge the central bank into adopting a dovish monetary policy stance later this year, fueling much of the optimism.
July's consumer inflation report is due on Tuesday and investors currently anticipate that the Fed will lower borrowing costs by about 60 basis points by December, according to data compiled by LSEG.
Citigroup and UBS Global Research became the latest brokerages to raise their year-end targets for the benchmark S&P 500.
Micron Technology (MU.O), opens new tab raised its forecast for fourth-quarter revenue and adjusted profit, sending its shares rising 3%.
Intel (INTC.O), opens new tab was up 5.4% after a report said CEO Lip-Bu Tan was expected to visit the White House. Trump had called for his removal last week.
TKO (TKO.N), opens new tab jumped 7.5% after Paramount (PSKY.O), opens new tab bought the rights from the live entertainment company to exclusively distribute UFC events for the next seven years in a deal valued at around $7.7 billion.
Trump is expected to meet Russia's President Vladimir Putin on Friday to try and negotiate an end to the war on Ukraine.
Declining issues outnumbered advancers by a 1-to-1 ratio on the NYSE. Advancing issues outnumbered decliners by a 1.05-to-1 ratio on the Nasdaq.
The S&P 500 posted 13 new 52-week highs and 14 new lows, while the Nasdaq Composite recorded 60 new highs and 82 new lows.
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