US stock futures tread water, chip stocks dip on China sales deal
Semiconductor giant Nvidia (NVDA.O), opens new tab slipped 0.6% in premarket trading and Advanced Micro Devices (AMD.O), opens new tab lost 1.6%.
A U.S. official told Reuters the companies had agreed to give the United States government 15% of revenue from the sales of their advanced computer chips to China, days after the Commerce Department began issuing licenses for the sale of Nvidia's H20 chips.
Enabling semiconductor sales to China was an integral issue in the agreement Washington signed with Beijing earlier this year and the latest development could strain the relationship between the world's two largest economies. The deal expires on Tuesday.
"The Trump administration reckons higher prices and snarled-up supply chains are an acceptable price to pay to encourage more U.S. manufacturing," said Susannah Streeter, head of money and markets, Hargreaves Lansdown.
"The unusual arrangement is another example of a mega tech company acquiescing to the U.S. administration's demands, to gain an upper hand as trade relations are redrawn."
Markets also awaited clarity on the sector tariffs U.S. President Donald Trump has announced.
At 07:13 a.m. ET, Dow E-minis were up 131 points, or 0.30%, S&P 500 E-minis were up 10 points, or 0.16%, and Nasdaq 100 E-minis were up 19.5 points, or 0.08%.
Traders took a breather 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.
Investors expect the recent shake-up 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.
The 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.
A better-than-feared earnings season was also a relief and BofA's monthly fund manager survey showed that owning megacap stocks was again the most popular trade.
Apple (AAPL.O), opens new tab was a standout last week following its biggest weekly showing in five years after the iPhone maker unveiled a series of U.S. investment pledges. The company's shares were down 0.6% on Monday.
In earnings, AMC Entertainment (AMC.N), opens new tab rose 5.2% after the cinema chain beat estimates for quarterly revenue.
U.S.-listed shares of lithium producers rose. Albemarle (ALB.N), opens new tab jumped 11% and Lithium Americas gained 8.2% after Chinese battery giant Contemporary Amperex Technology (CATL) (300750.SZ), opens new tab halted output at a major mine, raising hopes that it would erode the oversupply in a market grappling with soft demand.
Intel (INTC.O), opens new tab was up 1.7% after a report said CEO Lip-Bu Tan was expected to visit the White House. Trump had called for his removal last week.
In geopolitics, Trump and Russia's President Vladimir Putin are expected to meet on Friday to try and negotiate an end to the Ukraine war, which could affect the outlook for crude prices.
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