Wall Street stocks ease, chip setor wobbles after China sales deal
New York
Wall Street's main indexes were down on Monday as investors await inflation data this week and chip companies seesawed after agreeing to share a portion of revenue from China sales with the US under a trade policy shift from the Trump administration.
Nvidia was flat after reversing premarket losses, and Advanced Micro Devices was up 0.5 percent in volatile trading. A US official told Reuters the semiconductor majors had agreed to give the United States government 15 percent 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 US 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 US Global Investors.
Enabling semiconductor sales to China was an integral issue in the agreement Washington and Beijing signed this year, which expires on Tuesday. US President Donald Trump lauded China's cooperation in talks at a White House press conference on Monday.
At 2:01 p.m. ET (1801 GMT), the Dow Jones Industrial Average fell 176.88 points, or 0.40 percent, to 43,998.91, the S&P 500 lost 5.60 points, or 0.09 percent, to 6,383.93, and the Nasdaq Composite lost 12.87 points, or 0.06 percent, to 21,437.15.
Traders took a step back after the S&P 500 and the Nasdaq last week logged their strongest weekly performances 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 the recent shakeup at the US 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 anticipate that the Fed will lower borrowing costs by about 60 basis points by December, according to data compiled by LSEG.
'Markets are on rate watch, so anything inflation-related will move markets this week,' said Jamie Cox, managing partner at Harris Financial Group. 'It's all about three rate cuts versus two atthis point.'
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