Aug 24 (Reuters) - S&P 500 and Nasdaq futures slipped on Monday as investors prepared for a pivotal week marked by the prospect of fresh U.S. sanctions on Iran, Federal Reserve Chair Kevin Warsh's Jackson Hole speech and quarterly results by AI bellwether Nvidia.
The U.S. is prepared to roll out economic sanctions targeting Iran's trade partners, in what it called "the greatest financial offensive ever", with Treasury Secretary Scott Bessent scheduled to hold a press conference in the U.S. afternoon.
Still, oil prices fell over $1 a barrel as investors booked profits ahead of the announcement. [O/R]
Concerns over higher energy prices and ballooning government debt pushed U.S. Treasury yields higher last week, with the 30-year yield touching a 19-year high at one point, before the Treasury announced support measures.
The surge in yields hammered growth-oriented technology stocks, leaving the S&P 500 Information Technology sector down more than 3% for the week.
These stocks remained on edge heading into this week as investors turned their attention to the quarterly results of Nvidia, the world's most valuable company, due on Wednesday. Any signs of slowing growth could reignite concerns over stretched valuations and how far the AI-driven rally could run.
"Stellar results may not guarantee a positive reaction given the souring sentiment around AI heavyweights recently," said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.
"With strong Q2 earnings already baked into prices, AI financing worries and political/geopolitical headlines are gently taking control of market action."
Bloomberg News reported on Saturday that some of Nvidia's largest customers have been told that prices of servers containing its AI chips would rise by more than 15% in many cases.
Trading in megacaps was mixed on Monday, with Apple and Nvidia up 0.5% and 0.1% before the bell, while Alphabet and Amazon.com were down 0.4% and 0.2%, respectively.
Most chipmakers were also lower. Data storage companies Sandisk was down 4.5%, while Seagate lost 3.3%.
U.S.-listed shares of Alibaba slipped 3.4% after the Chinese e-commerce giant launched a $10.2 billion share sale at a sharp discount to fund its AI ambitions.
Financing of the AI buildout through various methods are weighing on free cash flow at many hyperscalers, stoking investor concerns over how far the spending could stretch without impacting their bottom line.
At 05:30 a.m. ET, Dow E-minis were down 12 points, or 0.02%, S&P 500 E-minis were down 12.75 points, or 0.17%, and Nasdaq 100 E-minis were down 176.5 points, or 0.60%.
Meanwhile, Warsh's speech at the Fed's annual Jackson Hole symposium in Wyoming will be closely watched this week for hints on how the central bank plans to navigate monetary policy amid rising oil prices and bond yields.
"We no longer know who will ultimately control the long end of the U.S. yield curve: the Treasury, the Fed, or the bond market itself... In the wake of last week's reaction to Treasury's announcement, the market still has the last word," said Ozkardeskaya.
"Jackson Hole gathering will bring some clarity on how the Fed will fit into this."
Money market participants are fully pricing in one 25-basis-point interest rate hike by the end of 2026, according to LSEG data. A benign inflation report earlier this month, however, significantly reduced chances of an immediate rate hike.
(Reporting by Purvi Agarwal in Bengaluru; Editing by Shilpi Majumdar)
