US Session: U.S. Markets are Expected to Open Flat as Investors Await Tomorrow’s Fed Meeting

Five key things investors need to know before the Wall Street open

1. Battle after battle

Paramount Skydance CEO David Ellison is not taking lightly his loss to Netflix in the bidding war for Warner Bros. Discovery. Paramount announced yesterday that it is making a hostile offer directly to WBD shareholders — $30 per share in cash, with Ellison telling CNBC he wants “to finish what we started.”

What you need to know:

• Paramount’s offer is the same one Warner Bros. Discovery’s management rejected last week in favor of Netflix. This time, however, the decision will be in shareholders’ hands.
• President Donald Trump said over the weekend that the Netflix–WBD deal “could be a problem” because of the potential market share of the streaming giant. He also said he would be “involved” in the approval process.
• Paramount’s hostile offer is supported by Jared Kushner — Trump’s son-in-law, according to a regulatory filing.
• Meanwhile, Comcast president Mike Cavanagh said his company’s bid is “weaker on cash” compared with the other two offers.

Paramount shares jumped 9% yesterday, Warner Bros. Discovery gained more than 4%, while Netflix slipped over 3%.

Disclosure: Comcast is the parent company of NBCUniversal, which owns CNBC. Versant will become CNBC’s new parent company following its planned spin-off from Comcast.

2. AI moves in Washington

Trump announced yesterday that Nvidia will be allowed to supply its H200 AI chips to “approved clients” in China and other countries — only if the U.S. receives a 25% cut of the deal.

The Commerce Department is finalizing the details, Trump said in a social media post, adding that “the same approach will apply to AMD, Intel and other U.S. companies.” Shares of Nvidia, AMD and Intel rose in after-hours trading. Trump added that China’s President Xi Jinping “responded positively” to the plan.

Meanwhile, House Democrats are forming a committee on artificial intelligence as they seek to position themselves as leaders on the issue amid rising lobbying efforts and election spending from the tech sector in Washington.

3. From “Llama” to “Avocado”

Meta has invested billions of dollars in shifting its AI strategy, but according to CNBC, the transition has caused internal confusion and a chaotic approach.

Earlier this year, CEO Mark Zuckerberg promoted the Llama AI models, saying they would become “the most advanced in the industry.” CNBC has learned, however, that Meta is now focusing on a new model codenamed Avocado, which may be proprietary (closed-source) rather than open-source.

In other Big Tech news: Apple is undergoing major top-level changes, including the departures of its AI chief and its general counsel. Chip development head Johny Srouji assured employees in a memo that he does not plan to leave “in the near future.”

4. Support for farmers

Trump announced a $12 billion aid package for farmers affected by tariffs, saying the funds will come from revenue generated by those same tariffs.

A White House official told CNBC that up to $11 billion will be allocated to the USDA’s new program, Farmer Bridge Assistance, for one-time payments to producers of major crops. The remaining $1 billion will be held back until the market situation is evaluated.

Meanwhile, Trump suffered a legal setback: a federal judge struck down his ban on new wind farms, calling it “arbitrary, capricious and contrary to law.”

5. McDonald’s New Year’s resolution

McDonald’s will enforce stricter control over its franchise partners beginning in 2026. The company will monitor whether their pricing aligns with its “affordable value” goals, aiming to attract more price-sensitive customers, according to an internal memo seen by CNBC.

About 95% of McDonald’s restaurants are operated by franchisees. The company will update its standards and conduct a “comprehensive assessment” of pricing practices. Owners who fail to comply may face penalties — including restrictions on opening new locations or termination of their franchise agreements.

U.S. markets expected to open little changed

U.S. futures remain close to flat on Tuesday, despite gains in Nvidia after President Donald Trump approved the sale of H200 chips to China in a deal that gives the U.S. government a significant share.

Futures tied to the Dow Jones Industrial Average are hovering near the unchanged line. S&P 500 and Nasdaq 100 futures are also little changed.

Nvidia shares are ticking higher after Trump’s Truth Social post Monday night, stating that the company can supply H200 chips to “approved clients” in China and other countries, provided that 25% of the sale value is paid to the U.S. government. Trump added that China’s President Xi Jinping “responded positively” to the deal. Nvidia’s CEO Jensen Huang met with Trump last week, and the agreement appears to be a win for the chipmaker after months of trade negotiations.

On Monday, technology stocks led the market. Of the 11 S&P 500 sectors, tech was the only one to finish higher, supported by semiconductor strength. Broadcom gained nearly 3%, while Nvidia and Microsoft added around 2% after The Information reported Microsoft may co-develop chips with Broadcom.

Meanwhile, all three major U.S. indexes slipped in the previous session, and the 10-year Treasury yield rose as concerns about persistent inflation lingered.

This week, traders await the Federal Reserve’s interest rate decision on Wednesday, the final one of the year. Markets expect the Fed to cut rates by another 25 basis points, matching its September and October decisions. Fed funds futures indicate an 89% probability of a cut, up from under 67% about a month ago, according to CME’s FedWatch tool.

“While a rate cut seems almost certain, the Fed’s economic projections and Chair Powell’s comments will be key to how markets react — not just this week, but likely setting the tone into the end of the month,” said Brett Kenwell, U.S. investment analyst at eToro. “After the recent pullback in stocks and crypto, higher-risk investors are hoping the Fed supports a year-end rally rather than cooling the recovery.”

Weaker-than-expected September core PCE data have boosted stocks, helping the three major U.S. indexes finish higher for a second consecutive week.

Kenwell notes that the Fed is balancing several factors ahead of its decision: persistent inflation, a murky macroeconomic environment, delayed economic data due to the U.S. government shutdown, and expectations of a new Fed chair.

“There are many moving parts for the Fed in 2026. The key question is whether it can maintain a more accommodative tone if these factors persist into 2026, or whether its dual mandate will constrain a softer policy stance.”