US STOCKS-Wall St poised for muted open as Fed rate cut decision nears

*

Futures off: Dow 0.06%, S&P 500 0.07%, Nasdaq 0.16%

*

U.S. to allow Nvidia H200 chip shipments to China

*

Warner Bros fight heats up with $108 bln hostile bid from Paramount

(Updates to before markets open)

By Johann M Cherian and Pranav Kashyap

Dec 9 (Reuters) - Wall Street's main stock indexes were set to open little changed on Tuesday as investors awaited the Federal Reserve's policy decision, while Nvidia (NVDA) shares were whipsawed by contrasting news around exports of advanced AI chips to China.

Nvidia (NVDA) shares rose as much as 2% in premarket trading after U.S. President Donald Trump said he would allow the company to ship H200 processors, its second-most powerful AI chips, to China but will collect a 25% fee on those exports.

The stock, however, pared some of those gains after a Financial Times report said that Beijing was set to curb or block domestic companies from purchasing these chips.

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.

"While the deal does not include the most powerful Blackwell chips, it is a positive step towards maintaining the current good trade relations between the two largest economies," said Achilleas Georgolopoulos, senior market analyst at brokerage XM.

Advanced Micro Devices (AMD) and Intel (INTC) were marginally higher, as Trump said a similar approach would apply to other semiconductor companies.

At 8:35 a.m. ET, Dow E-minis were down 30 points, or 0.06%, S&P 500 E-minis were down 4.5 points, or 0.07% and Nasdaq 100 E-minis were down 41.75 points, or 0.16%.

The spotlight this week is on the Fed's two-day policy meeting, which kicks off on Tuesday and ends with a decision on Wednesday.

Fresh data has shown that inflation is still stubborn and running above the Fed's 2% target, even as secondary indicators hint the once-red-hot labor market is starting to cool in some sectors.

Traders now see an 89.6% chance of a 25-basis-point rate cut this week, according to CME's FedWatch Tool, though policymakers remain divided.

Several policymakers have cautioned that price pressures could easily reaccelerate in the months ahead.

Even so, markets are still penciling in another 50 basis points of easing next year as the Fed seeks to safeguard a softening jobs backdrop.

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

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.

Traders also 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 Bros shares added 1.2% in Tuesday premarket trading.

Home improvement chain Home Depot lost 2.5% after forecasting fiscal 2026 comparable sales growth and profit below estimates.

CVS Health gained 3% after the health insurer forecast 2026 profit above estimates. (Reporting by Johann M Cherian and Pranav Kashyap in Bengaluru; Editing by Tasim Zahid and Saumyadeb Chakrabarty)