By Purvi Agarwal and Niket Nishant
Aug 24 (Reuters) - Wall Street was headed for a lower open on Monday as investors weighed the U.S. pledge of an "economic D-Day" against Iran while awaiting AI giant Nvidia's quarterly results and a closely watched inflation report later this week.
The developments mark a pivotal week for markets that may determine whether equities can resume their climb toward record highs, after latest flare-ups in Middle East tensions interrupted the rally.
The U.S. has said it
could roll out economic sanctions targeting Iran's trade partners, in what it called "the greatest financial offensive ever."
Treasury Secretary Scott Bessent, who warned of an "economic D-Day" in an opinion piece published in the Financial Times, is scheduled to hold a press conference in the afternoon.
EYES ON WARSH'S JACKSON HOLE SPEECH
Concerns over surging energy prices and ballooning government debt had pushed U.S. Treasury yields higher last week, with the 30-year yield touching a 19-year peak before the Treasury announced support measures.
Higher yields hammered growth-oriented technology stocks, causing Wall Street's three main indexes to post losses last week.
Bessent could tap Treasury's near $1 trillion General Account to help fund bond buybacks, instead of issuing short-term bills, CNBC reported on Monday, citing two senior Treasury officials. The 30-year U.S. Treasury yield declined slightly but remained above the 5% threshold.
The turbulence has sharpened focus on Federal Reserve Chair Kevin Warsh's speech at the Jackson Hole symposium later this week, where investors will parse his remarks for clues on policymakers' reading of the Treasury's rescue efforts and the latest economic data.
Quarterly results from Nvidia, the world's most valuable company, are expected to be another key catalyst for markets. Any sign of slowing growth could reignite concerns over stretched valuations and how far the AI-driven rally could run.
"Chips have become a frothy space. I just don't know what good news hasn't already been priced in," said Marta Norton, chief investment strategist at retirement and wealth services provider Empower.
"It doesn't necessarily mean that the fundamentals are challenged. You can have a great company, but that doesn't necessarily make it a great investment at a given point in time."
Bloomberg News reported on Saturday that some of Nvidia's largest customers have been told prices of servers containing its AI chips would rise by more than 15% in many cases.
Trading in megacaps was mixed before the bell on Monday. While Apple and Amazon.com each gained less than a percent, Alphabet lost 0.3%.
Most chipmakers were also lower. Marvell Technology and Micron Technology fell more than 3% each. Sandisk slipped 5.4%.
U.S.-listed shares of Alibaba slipped 2.4% after the Chinese e-commerce giant launched a $10.2 billion share sale to fund its AI ambitions.
At 08:38 a.m. ET, Dow E-minis were down 44 points, or 0.08%, S&P 500 E-minis were down 14.75 points, or 0.19%, and Nasdaq 100 E-minis were down 186.25 points, or 0.63%.
U.S.-listed shares of PDD rose 3% after the Temu owner reported an 8% rise in second-quarter revenue. The metric, however, missed market estimates.
Markets will also scrutinize the Personal Consumption Expenditure report, the Fed's preferred inflation gauge, due on Wednesday for signs that the Iran conflict is feeding into broader economic conditions.
Traders have fully priced 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, reduced chances of an immediate increase.
(Reporting by Purvi Agarwal, Niket Nishant and Arasu Kannagi Basil in Bengaluru; Editing by Shilpi Majumdar)
