U.S. equity futures slipped on Tuesday morning as investors grappled with a trio of headwinds: climbing oil prices, higher Treasury yields and growing unease about the future pace of artificial‑intelligence investment.
Tech stocks feel the pressure
Leading technology names opened lower, with Alphabet and Microsoft each down more than 1 percent in pre‑market trading. Chipmakers, which bore the brunt of Monday’s sell‑off, traded in a narrow range, while Nvidia managed a modest gain.
Industry leaders have recently called for a more cautious approach to AI development, citing safety concerns. Although details on how such a slowdown would be implemented remain vague, the sentiment has added to market nervousness at a time when inflation remains above the Fed’s target and borrowing costs are expected to rise.
Fed rate hike looks likely
Traders are pricing in a 92 % chance that the Federal Reserve will raise interest rates on Wednesday, reflecting expectations that the central bank will continue its effort to curb inflation.
At 04:36 a.m. ET, Dow E‑minis fell 341 points (‑0.65 %), S&P 500 E‑minis dropped 39.75 points (‑0.52 %) and Nasdaq 100 E‑minis were down 168.25 points (‑0.58 %).
Oil and Treasury yields add to market strain
Geopolitical tension in the Middle East has kept oil prices elevated, with Brent crude futures up more than 2 % to $108.06 a barrel and U.S. West Texas Intermediate futures trading at $103.76, also up over 2 %.
“Energy is doing most of the damage on the inflationary front at present,” said Anthony Saglimbene, chief market strategist at Ameriprise Financial.
The yield on the benchmark 10‑year Treasury note rose to 5.0286 %, its highest level since 2007, further dampening the appeal of equities.
Broader economic backdrop
Recent economic data have offered little reassurance. The Labor Department reported that consumer prices accelerated in August, and a core inflation measure posted its largest increase in four months.
“Given current inflation dynamics, a solid employment backdrop, and a new Fed Chair looking to establish credibility, Wednesday’s rate decision carries the highest odds of a hike markets have seen all year,” Saglimbene added.
Other market moves
Shares of Dave & Buster’s fell nearly 14 % after second‑quarter revenue missed expectations. Crypto‑related stocks also slipped, with Coinbase and Strategy dropping more than 4.5 % each following a near‑3 % slide in Bitcoin.
“I actually think this is more likely to be a hiccup than an end to the AI trade. The AI genie is not going to be put back in the bottle,” said Nancy Tengler, CEO of Laffer Tengler Investments. “I don’t think a correction in AI stocks would hurt this market. We’ve run pretty hard, pretty fast over the last few years.”
Original reporting: Appleton, WI News Feed (HLL/CB) — read the source article.
