Stock futures showed little movement Monday evening, despite a notable increase in Nvidia shares following a significant announcement from President Donald Trump. The approval of H200 chip sales to China included a stipulation that one-quarter of the sales proceeds would go to the U.S. government. After this news broke, Nvidia’s shares climbed over 2% in after-hours trading. Trump stated that Chinese President Xi Jinping had a positive response to the arrangement. Nvidia’s Chief Executive Jensen Huang recently met with Trump, making this agreement a crucial development for the tech company after extensive negotiations.
In broader market trends, futures linked to the Dow Jones Industrial Average remained slightly below the flatline. Meanwhile, S&P futures inched up by less than 0.1%, and Nasdaq 100 futures increased by over 0.1%. This uplift in tech stocks came as investors were buoyed by gains from various semiconductor companies. Among these, Broadcom’s shares saw a rise of almost 3%, while both Nvidia and Microsoft experienced gains of around 2%, spurred on by reports suggesting that Microsoft is exploring the design of custom chips in collaboration with Broadcom.
The tech sector emerged as a standout performer in Monday’s trading session, being the only one of the 11 S&P 500 sectors to close in positive territory. However, the three primary U.S. stock indexes had seen declines in the previous trading session. Compounding concerns over the market, the 10-year Treasury yield has been on the rise, reflecting ongoing worries about the implications of persistent inflation.
Focus now shifts to the Federal Reserve’s anticipated interest rate decision, set for Wednesday, which will be the final one for the year. Market expectations lean toward a reduction in the key overnight lending rate by another quarter percentage point, following similar cuts in September and October. According to CME’s FedWatch tool, odds for a rate decrease currently stand at 89%, up significantly from under 67% just a month prior.
Bret Kenwell, a U.S. investment analyst at eToro, emphasized the importance of the Federal Reserve’s economic projections and commentary from Chairman Powell as critical factors that will likely influence market reactions in the week ahead and possibly shape trends for the remainder of the month. With recent market pullbacks and the performance of cryptocurrencies, investors adopting a risk-on approach are hoping that the Fed’s actions will support a year-end rally rather than dampen the recent recovery.
Last Friday’s release of softer-than-expected September core personal consumption expenditures price index data had provided a boost to stock performance, as the three main U.S. stock averages recorded increases for the second consecutive week. Kenwell noted that the Fed faces a complex landscape heading into its decision, marked by persistent inflation concerns, economic data delays attributed to a prolonged U.S. government shutdown, and the anticipation of appointing a new Fed chairman.
Additionally, investors will be looking ahead to earnings reports from key players in artificial intelligence, including Oracle and Broadcom, as well as from retailers Costco and Lululemon, which promise to be closely scrutinized as the week unfolds.
