U.S. stock futures opened Monday with a mixed performance ahead of a critical Federal Reserve rate decision scheduled later this week. S&P 500 and Nasdaq 100 futures inched higher, while Dow futures slipped, as investors weighed signs of a cooling labor market against persistent inflation pressures. In parallel, U.S. and Chinese officials continued discussions in Spain on trade matters and the future of TikTok’s U.S. operations.
Futures show contrasting trends
Ahead of a week packed with major central bank announcements, including the Fed, the Bank of Canada, and the Bank of England, U.S. futures remained volatile. At 03:26 ET, S&P 500 futures rose 9 points (0.1%), Nasdaq 100 futures gained 29 points (0.1%), and Dow futures fell 287 points (0.6%).
Wall Street ended last week with mixed results. The tech-heavy Nasdaq Composite recorded a new closing high, while the S&P 500 and Dow Jones Industrial Average slipped slightly. Microsoft shares (NASDAQ:MSFT) rose after the company avoided a potential large EU antitrust penalty by offering a discounted price for Office, excluding Teams. Tesla (NASDAQ:TSLA) also gained, supported by comments from the automaker’s board chair that CEO Elon Musk was focused on running the company after a brief stint at the White House.
Investors were also digesting University of Michigan data showing a decline in consumer sentiment for September and continued concerns about inflation fueled by tariffs.
Fed rate decision dominates focus
All eyes remain on the Federal Reserve as its two-day meeting concludes Wednesday. A rate cut is widely anticipated, reflecting signs of a softer U.S. labor market. Lower rates are expected to stimulate investment and hiring, though there is a risk of increased inflation.
Last week’s consumer price index report showed a slight uptick in August due to rising housing and food costs, suggesting inflationary pressures persist. Meanwhile, weekly initial jobless claims pointed toward a softening labor market. CME’s FedWatch Tool shows roughly a 95% probability of a 25-basis-point cut and about a 5% chance of a 50-basis-point reduction. The current Fed target rate remains at 4.25% to 4.5%.
“A cooling economy and weakening jobs market will help to dampen inflation tied to tariffs, and the Fed is now in a position to resume loosening policy from ’somewhat restrictive’ territory towards a neutral footing,” analysts at ING said in a note.
U.S.-China negotiations continue in Madrid
After limited progress on Sunday, U.S. and Chinese officials resumed talks in Spain. Expectations for breakthroughs on longstanding trade issues remain low, with a focus on the TikTok divestment deadline for ByteDance’s U.S. operations. Failure to sell the unit by September 17 could force TikTok to cease operations in the United States.
Reuters reported that President Donald Trump may extend the deadline. Both sides planned to “start again in the morning,” Bessent told reporters, after only six hours of talks on Sunday. China’s embassy in Madrid indicated that a concluding press conference might occur Monday, suggesting a near-term wrap-up. Bessent will travel to London on Tuesday ahead of Trump’s state visit with King Charles later in the week.
China opens probe into U.S. chip policies
Before talks began, China’s Ministry of Commerce launched an investigation into U.S. policies affecting semiconductor trade, assessing whether export controls and other measures have unfairly hindered Chinese firms’ development of AI and high-tech capabilities. A separate probe examined potential dumping of U.S. analog chips in devices such as sensors and hearing aids. Analysts at Vital Knowledge warned investors to “expect pressure” on companies including Texas Instruments, Analog Devices, and NXP Semiconductors.
Oil prices rise amid Russian supply concerns
Oil prices extended their recent gains amid concerns about potential Russian supply disruptions following Ukrainian drone attacks on Moscow’s energy infrastructure. At 03:27 ET, Brent futures rose 0.5% to $67.29 per barrel, and U.S. West Texas Intermediate futures increased 0.1% to $62.76 per barrel.
Both contracts gained over 1% last week as Ukraine stepped up strikes on Russian oil assets, including the Primorsk export terminal and the Kirishinefteorgsintez refinery. These disruptions could reduce Russian oil output significantly, impacting major markets such as India and China.
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