US STOCKS-Wall St futures flat as Fed decision looms, Nvidia gains

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Futures up: Dow 0.06%, S&P 500 0.09%, Nasdaq 0.09%

Dec 9 (Reuters) -

U.S. stock index futures were flat on Tuesday as investors remained cautious a day ahead of a long-anticipated monetary policy decision by the Federal Reserve, while Nvidia (NVDA) gained after the chip giant received approval to sell some of its processors to China.

Nvidia (NVDA) rose 1.9% in premarket trading after U.S. President Donald Trump said he will allow the chip leader to sell its H200 processors, its second-best artificial intelligence chips, to China and collect a 25% tax on the exports.

Export controls on U.S. chips capable of powering AI have been a central point of friction in trade talks between Washington and Beijing this year

"Investors bid up shares in Nvidia (NVDA) after the news broke, implying that they see scope for even higher earnings in the future," said Russ Mould, investment director at AJ Bell.

Advanced Micro Devices (AMD) and Intel (INTC) added about 1% each, as Trump said a similar approach would apply to other semiconductor companies.

At 05:37 a.m. ET, Dow E-minis were up 29 points, or 0.06%, S&P 500 E-minis were up 6.5 points, or 0.09% and Nasdaq 100 E-minis were up 23.75 points, or 0.09%.

The focus will now shift to the Fed's two-day meeting that is expected to start on Tuesday, with the verdict due on Wednesday.

Data points to inflation still sticky and above the Fed's 2% target.

However, secondary indicators suggest the job market is softening in some areas. As a result, investors are now pricing in an 89.6% chance that the central bank will cut rates by 25 basis points this week, according to CME's FedWatch Tool.

The decision is unlikely to be unanimous, as several Fed officials have warned that price pressures could flare up in the coming months.

Despite this, investors still expect the central bank to cut rates by another 50 basis points next year to ensure labor market stability.

Investors are awaiting Tuesday's 10 a.m. ET release of the October JOLTS report, which offers traders one last look at labor market data before Wednesday's Fed decision.

The government shutdown and "the subsequent lack of federal reports on jobs, inflation and more has left the Fed to rely on more-limited private-sector data to decode these mixed signals, making it harder to know whether the economy needs easing or tightening," said Brent Schutte, chief investment officer at Northwestern Mutual Wealth Management Company.

Expectations for Fed rate cuts have underpinned risk taking, bringing Wall Street's S&P 500 within 1% of a record high, while an index tracking small caps has outperformed the benchmark index this quarter.

Among others, traders kept an eye on a

bidding war

between Paramount Skydance (PSKY) and Netflix (NFLX) over Warner Bros that has lifted shares of the iconic Hollywood studio by 11% in the past two sessions. Warner Brother's shares added 1% in Tuesday premarket trading.

Twenty One Capital tanked 30% ahead of its first trading day following a blank-check acquisition deal with Cantor Equity Partners. (Reporting by Johann M Cherian in Bengaluru; Editing by Tasim Zahid)