Gold prices fall as geopolitical tensions ease; U.S. CPI looms
Investing.com - U.S. stock futures climb ahead of week of major economic data releases that could help determine the trajectory of interest rates in the coming months. Meanwhile, artificial intelligence remains front of mind for investors, contributing to a spike in the tech-heavy Nasdaq Composite to a new record closing high last week. AI-darling Nvidia (NASDAQ:NVDA) promises to give the U.S. government a cut of its sales in China, media reports say, while enterprise AI application software group C3.ai unveils a preliminary earnings statement that falls short analysts’ expectations.
1. Futures higher
U.S. stock futures rose on Monday, as investors geared up for a week filled with key economic data points and assessed the staying power of a boom in enthusiasm around artificial intelligence.
By 03:00 ET (07:00 GMT), the Dow futures contract had risen by 108 points, or 0.2%, S&P 500 futures had gained 12 points, or 0.2%, and Nasdaq 100 futures had advanced by 37 points, or 0.2%.
The tech-heavy Nasdaq Composite jumped in the prior session, closing at a fresh all-time high, while other major averages also climbed.
Underpinning the Nasdaq’s new peak was a rally in Apple (NASDAQ:AAPL), with the iPhone-maker’s stock price surging by more than 13% last week -- its largest weekly gain since 2020 -- thanks in part to hopes that the company’s vow to plug additional investment into the U.S. will allow it to evade much of President Donald Trump’s sweeping tariffs. The benchmark S&P 500’s tech and communication services indices also ended at fresh highs.
Meanwhile, expectations that recent signs of slowing in the U.S. labor market will lead the Federal Reserve to cut interest rates at its next gathering in September offered further support to equities (more below).
2. Nvidia promises to give cut of China AI chip sales to U.S. government - report
Nvidia is reportedly set to pay the U.S. government 15% of the returns it makes from the sale of its artificial intelligence to China, according to The New York Times (NYSE:NYT).
Citing people familiar with the matter, the paper said Nvidia CEO Jensen Huang met with President Trump at the White House last week and agreed to grant Washington a cut of the money it rakes in from its business in the large -- and lucrative -- Chinese market.
Peer Advanced Micro Devices (NASDAQ:AMD) has also agreed to the same deal, the report said.
Nvidia was reportedly given licenses by the Commerce Department to begin sales of its China-specialized H20 AI chip two days after the meeting, even though the White House said one month ago it had granted the company a green light to sell the processors in the country.
3. C3.ai shares plummet
Shares of C3.ai (NYSE:AI) were sharply lower in extended hours trading after the enterprise AI application software group issued a disappointing preliminary earnings announcement.
The statement, released after the close of markets on Friday, showed that the firm now anticipates total revenue for its fiscal first quarter will between $70.2 million to $70.4 million, while its adjusted loss would be $57.7 million to $57.9 million.
Analysts had been anticipating quarterly revenue of $104 million and an operating loss of $27.3 million. C3.ai added that it is also completing a restructuring of its sales and services organization.
The Redwood, California-based firm will release its complete results for the period on September 3.
4. Data ahead this week
On the economic calendar, traders will be keeping particularly close tabs on the release of U.S. consumer price data for July on Tuesday.
A separate gauge of producer prices for final demand is due out on Thursday, while a metric of American retail sales and a survey of consumer sentiment are expected to be published on Friday.
Along with the labor market, inflation remains the other crucial pillar of the Federal Reserve’s two-pronged mandate. The outlook for rates has been complicated by data earlier this month which showed weak job growth in July and a sharp downward revision to the numbers for June and May -- all indications of a cooling labor market which may bolster the case for rate cuts that could fuel investment and spending.
Yet, at the same time, inflation has remained stubbornly elevated above the Fed’s stated 2% target, driving worries that a reduction in borrowing costs could spur inflationary pressures.
5. Fed’s Bowman backs rate cuts
Against this backdrop, the Fed has largely adopted a "wait-and-see" attitude to rate decisions, opting instead for more clarity to emerge around the impact of Trump’s tariffs on the broader economy.
However, cracks have started to appear amongst Fed policymakers, with media reports suggesting that many officials are becoming more open to the idea of impending cuts. This after two Fed rate-setters dissented from the majority at the Fed’s July gathering, arguing instead for reductions.
One of those dissenters, Fed Governor Michelle Bowman, reiterated this stance in a speech on Saturday, saying the July jobs report had underscored her worries around the state of the labor market. In effect, she argued, the softness in the jobs picture has outweighed any fears around spiking price gains.
The comments come as Trump has been frequently calling on the Fed to quickly ratchet down rates -- a campaign that has made Fed Chair Jerome Powell a particular recipient of the president’s ire and raised doubts around the longstanding independence of the central bank.