U.S. stock futures showed a mixed picture on Monday, with S&P 500 and Nasdaq futures ticking higher while Dow futures edged lower, as investors prepared for a pivotal Federal Reserve interest rate decision later this week. With signals of a slowing labor market and persistent inflation, the Fed is widely expected to cut rates by at least 25 basis points on Wednesday. Meanwhile, American and Chinese officials continued talks in Spain for a second day, addressing issues including trade and the future of ByteDance’s U.S.-based TikTok operations.
Mixed signals in U.S. futures
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 traded close to the flatline on Monday. By 03:26 ET, S&P 500 futures were up 9 points, or 0.1%, Nasdaq 100 futures had gained 29 points, or 0.1%, while Dow futures slipped 287 points, or 0.6%.
Last week’s Wall Street session ended with mixed results: the tech-heavy Nasdaq Composite reached a new closing record, while the S&P 500 and Dow Jones Industrial Average edged lower. Microsoft shares (NASDAQ:MSFT) contributed to Nasdaq gains after the software giant avoided a hefty EU antitrust penalty by offering a lower price for its Office service, excluding Teams. Tesla (NASDAQ:TSLA) also surged, boosted in part by remarks from the electric carmaker’s board chair that CEO Elon Musk was concentrating on running the company after a brief White House stint.
Traders were also digesting University of Michigan data showing weakened consumer sentiment in September and ongoing concerns over inflation pressures driven by tariffs.
The Fed decision in focus
The Federal Reserve will conclude its two-day policy meeting on Wednesday, with markets nearly certain of a rate cut. Policymakers are expected to respond to a softening labor market, marking the first reduction since the easing cycle paused in December. Lowering rates could stimulate investment and hiring, though it also risks adding inflationary pressures.
Last week, the U.S. consumer price index saw a slight uptick due to rising housing and food costs, signaling persistent inflation, while a separate report indicated an increase in weekly initial jobless claims, supporting the case for a rate cut. Currently, there is roughly a 95% chance of a 25-basis-point reduction and about a 5% probability of a 50-basis-point cut, according to CME’s FedWatch Tool. The Fed’s target range stands 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 talks continue in Madrid
U.S. and Chinese officials met for a second day in Spain after limited progress on the first day of discussions on Sunday. Expectations for major breakthroughs on longstanding trade issues remain subdued, with observers anticipating the talks may focus on extending the deadline for ByteDance to divest TikTok’s U.S. operations. If the sale does not happen by September 17, TikTok could face a shutdown in the United States.
According to a source familiar with the matter, Reuters reported that President Donald Trump may extend the deadline. Both sides agreed to “start again in the morning,” Bessent told reporters after six hours of talks on Sunday. China’s embassy in Madrid indicated that a concluding press conference could take place Monday, signaling the discussions may wrap up soon. Bessent is scheduled to travel to London on Tuesday before Trump’s state visit with King Charles later in the week.
China probes U.S. chip policy
Ahead of the talks, China’s Ministry of Commerce launched an anti-discrimination investigation into U.S. policies affecting the semiconductor trade. Beijing is examining whether Washington unfairly restricted Chinese companies through export controls and other measures, aiming to curb China’s AI and high-tech development. A separate probe is investigating potential dumping of U.S. analog chips in devices such as sensors and hearing aids. Analysts at Vital Knowledge said investors should “expect pressure” on stocks like Texas Instruments, Analog Devices, and NXP Semiconductors.
Oil prices inch higher
Oil extended gains on concerns about potential Russian supply disruptions following Ukrainian drone attacks on Moscow’s energy infrastructure. At 03:27 ET, November Brent futures climbed 0.5% to $67.29 a barrel, while U.S. West Texas Intermediate futures rose 0.1% to $62.76 a barrel.
Both contracts gained more than 1% last week as Ukraine stepped up strikes on Russian oil assets, including the Primorsk export terminal and the Kirishinefteorgsintez refinery. These attacks risk taking significant amounts of Russian oil offline, potentially affecting key markets such as India and China.
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