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U.S. stock index futures were largely unchanged on Monday as investors braced for a busy week ahead, with major semiconductor companies facing uncertainty due to the latest developments in U.S.-China trade policy.
Semiconductor giants Nvidia (NASDAQ: NVDA) and Advanced Micro Devices (NASDAQ: AMD) were both in the red, with Nvidia falling 1% in premarket trading and AMD losing 2%. These companies are caught in the middle of a key issue in the ongoing trade discussions between the U.S. and China. A U.S. official informed Reuters that Nvidia and AMD had agreed to allocate 15% of their revenue from advanced computer chip sales to China to the U.S. government. This comes shortly after the U.S. Commerce Department issued licenses for the sale of Nvidia’s H20 chips to China.
The sale of these semiconductors was a significant element of the U.S.-China agreement signed earlier this year, and its development could add tension between the two economies, particularly as the deadline for the deal’s expiration looms on Tuesday.
Markets are also awaiting clarity regarding the sector tariffs announced by U.S. President Donald Trump, which could further impact investor sentiment.
At 05:45 a.m. ET, Dow E-minis were up by 98 points, or 0.22%, with 7,922 contracts changing hands. S&P 500 E-minis rose by 6.25 points, or 0.10%, while Nasdaq 100 E-minis added 11.5 points, or 0.05%.
The trading action comes after a strong rally last week that helped the S&P 500 and Nasdaq post their best weekly performance in over a month. Investors are hopeful that recent changes at the U.S. Federal Reserve, combined with signs of labor market weakness, could push the central bank toward a dovish monetary policy stance later this year, fueling optimism.
Tuesday’s consumer inflation report is set to play a pivotal role in either adding to or alleviating doubts, as investors currently expect the Federal Reserve to lower borrowing costs by about 60 basis points by December, according to data compiled by LSEG.
Additionally, a better-than-expected earnings season has helped to boost investor sentiment, with Bank of America’s monthly fund manager survey showing that investing in megacap stocks remains the most popular strategy.
Apple (NASDAQ: AAPL) stood out last week, registering its biggest weekly performance in five years after the iPhone maker unveiled several U.S. investment pledges. However, the stock was down 0.7% on Monday.
Meanwhile, gene therapy developers took a hit, with Sarepta Therapeutics (NASDAQ: SRPT) dropping 7.6% and Capricor Therapeutics (NASDAQ: CAPR) declining 9%. This follows the news that Vinay Prasad, a vocal critic of U.S. COVID-19 vaccine and mask mandates, was expected to return to the U.S. Food and Drug Administration (FDA).
