US stocks seesawed on Monday morning after a strong open as chip stocks began selling off. Oil prices sank, offsetting tech weakness, as markets entered the busiest week of the quarter, jam-packed with more Big Tech earnings and a Federal Reserve decision.
The Dow Jones Industrial Average (^DJI) gained 0.5%, while the S&P 500 (^GSPC) hovered near the flat line. The tech-heavy Nasdaq Composite (^IXIC) slid into negative territory after a choppy week that sent the indexes lower.
Market sentiment wobbled in early trading as concerns emerged that China could overtake the US’s lead in artificial intelligence. Chip stocks made a U-turn after The Information reported that a Chinese state-backed company began mass-producing a key piece of chipmaking equipment, sending shares of Nvidia (NVDA) and ASML (ASML) down by over 4%.
Tech weakness offset some optimism after the US and Iran paused fighting, raising hopes that peace negotiations could restart after two weeks of attacks. Oil prices tumbled over 7% amid renewed optimism about a path to end the war, with Brent crude (BZ=F) futures trading below $90 a barrel at last check.
A continued decline in oil prices could take some pressure off the Federal Reserve, which is set to deliver an interest rate decision on Wednesday. The central bank is expected to hold rates steady as officials monitor progress on inflation, though a rate hike is not off the table in one of the least-telegraphed Fed decisions in years.
Top of mind, meanwhile, will be a wave of earnings reports, including a host of Big Tech earnings from Microsoft (MSFT), Meta Platforms (META), Apple (AAPL), and Amazon (AMZN). All eyes will be on capital expenditure guidance and AI monetization after Alphabet’s (GOOG, GOOGL) and Tesla’s (TSLA) capex caused a meltdown in the tech sector.