Futures inch lower as Micron slides, debt ceiling talks linger

[May 22, 2023]  By Shreyashi Sanyal and Shristi Achar A

(Reuters) - U.S. stock index futures inched lower on Monday as China's ban on Micron revived trade worries between Beijing and Washington, ahead of lawmakers' talks about raising the U.S. debt ceiling after a brief pause late last week.

In a move that was perceived as ramping up trade tensions between the two countries, China barred chipmaker Micron Technology Inc from selling memory chips to key domestic industries, sending its shares down 5% in premarket trading.

"We expected this and anticipate more moves from both sides and their allies as the U.S. seeks to slow China's industrial espionage and China retaliates," analysts at Citi wrote in a note, calling the ban the latest salvo in the U.S.-China trade war.

Shares of other semiconductor companies also fell, with Intel Corp, Nvidia Corp and Advanced Micro Devices Inc down between 0.4% and 1.5%.

Hopes that a deal would be struck sometime over the weekend to raise the $31.4 trillion U.S. debt limit helped Wall Street's main indexes end the last week with gains.

President Joe Biden and House Republican Speaker Kevin McCarthy will meet for talks on Monday after the two leaders held a phone call on Sunday that both sides described as positive.

Less than two weeks remain before a June 1 deadline after which the Treasury warned that the federal government will struggle to pay its debts, triggering a default that would cause chaos in financial markets and spike interest rates.

Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., May 11, 2023. REUTERS/Brendan McDermid

Apple Inc fell 1.0% after a report that Loop Capital downgraded the iPhone maker's stock to "hold" from "buy". This marked its first rating cut in five months, according to Refinitiv data.

At 7:03 a.m. ET, Dow e-minis were down 22 points, or 0.07%, S&P 500 e-minis were down 4.25 points, or 0.1%, and Nasdaq 100 e-minis were down 19.75 points, or 0.14%.

Investors will look for clues on the monetary policy path from a slew of Federal Reserve speakers later in the day, including St. Louis Fed President James Bullard, ahead of key data points this week such as the April personal consumption expenditure (PCE) index and durable goods.

The PCE index reading, considered to be the Fed's preferred inflation gauge, is due on Friday.

Meta Platforms Inc slipped 1.5% after the European Union privacy regulators slapped a $1.3 billion fine on the company for sending user information to the United States.

PacWest Bancorp rose 3.3% after the regional lender entered into an agreement to sell a portfolio of 74 real estate construction loans to a subsidiary of Kennedy-Wilson Holdings Inc.

Albemarle Corp added 1.3% after the lithium producer said it would supply battery-grade lithium hydroxide to Ford Motor Co.

(Reporting by Shreyashi Sanyal and Shristi Achar A in Bengaluru; Editing by Dhanya Ann Thoppil and Maju Samuel)

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