NEW YORK: Wall Street’s main indexes were choppy on Monday as investors prepared for a busy 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 and Advanced Micro Devices reversed premarket losses and were last up 0.2% and 2.6%, respectively, in volatile trading. A US 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 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 Inc.
Enabling semiconductor sales to China was an integral issue in the agreement Washington and Beijing signed earlier this year, which expires on Tuesday. US 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 fell 91.43 points, or 0.21%, to 44,084.19, the S&P 500 gained 6.87 points, or 0.11%, to 6,396.39, and the Nasdaq Composite rose 60.17 points, or 0.28%, to 21,510.19.
Six of the 11 major S&P 500 sectors slipped, while healthcare 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 and the Nasdaq 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 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 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 raised its forecast for fourth-quarter revenue and adjusted profit, sending its shares rising 3%.
Intel 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.
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