US stocks slip as tech sector sags and US-Canada trade tensions escalate

US equity markets opened mixed on Monday, with the S&P 500 and Nasdaq Composite declining as investors rotated out of technology stocks ahead of Nvidia’s earnings report. The sell-off in the tech sector was driven by concerns over rising AI server costs and reports that Apple may source memory chips from Chinese manufacturers. The PHLX Semiconductor Index fell by over three per cent, dragging down the broader tech-heavy Nasdaq Composite.

Trade tensions between the US and Canada intensified after negotiations collapsed over the weekend, prompting President Trump to announce 50 per cent tariffs on Canadian autos, auto parts, and steel effective 1 January 2027. Canadian Prime Minister Mark Carney suspended talks and vowed like-for-like retaliatory measures. General Motors and Ford shares fell in response, with Tesla and Stellantis also dropping by over two per cent.

The pressure on semiconductor stocks was compounded by reports that Nvidia informed customers it would hike AI server prices by more than 15 per cent early next year due to soaring memory chip costs. Additionally, rumours that Apple is testing dynamic random-access memory and NAND flash memory from Chinese semiconductor companies CXMT and YMTC weighed on memory chip plays, with Micron, Sandisk, Seagate Technology, and Western Digital all falling over five per cent.

Markets also awaited details on new US economic sanctions against Iran, with Treasury Secretary Scott Bessent expected to share more information at a Monday afternoon press conference. Bessent described the measures as an "economic D-Day," a phrase that contributed to a "dollar debasement" narrative driving gold futures to $4,720 per troy ounce, the highest level since May. Bitcoin also surged roughly 23 per cent over the past week, its best performance in more than three years.

Attention is now shifting toward Nvidia’s earnings report on Wednesday, which could be a pivotal moment for the artificial intelligence narrative that has powered the stock market. Samsung stock slid eight per cent after its $80 billion shareholder return plan failed to impress investors, highlighting a market-wide shift toward scrutinising return on investment and free cash flow guidance rather than just earnings per share.

The Federal Reserve’s Jackson Hole Symposium is also a key focus, with strategists expecting Chair Kevin Warsh to address the fixed income market. The US Treasury Department has spent the last week attempting to wrangle the bond market through surprise buybacks and jawboning remarks, but yields have bounced back to previous levels. Investors are looking for clearer guidance on the Fed’s reaction function to contain long-end yields.