U.S. Stock Futures Creep Up as Fed Rate Increase Takes Center Stage

U.S. stock index futures edged higher on Tuesday evening, though markets were broadly cautious ahead of a widely anticipated interest rate increase from the Federal Reserve.

Elevated oil prices, set against continued military tensions in the Middle East, also left markets nervous, along with a sharp climb in Treasury yields.

By 19:25 ET (23:25 GMT), S&P 500 Futures were up 0.1% at 7,663.50 points. Nasdaq 100 Futures also added 0.1% to 29,274.0 points, and Dow Jones Futures gained 0.1% to 52,574.0 points.

The advance followed two consecutive losing sessions on Wall Street, where higher oil prices, a selloff in artificial intelligence shares and expectations of a Wednesday Fed rate increase drove investors away from riskier assets.

Fed Meeting Awaited as Yields Jump on Expectations of 25 bps Increase

At the end of its two-day meeting on Wednesday, the Fed is broadly expected to lift rates by at least 25 basis points, to 4.0%.

Expectations for a hike have been reinforced by several policymakers flagging concerns about inflation becoming more stubborn, while August data published last week also pointed to persistent price pressures.

Apart from the increase itself, attention will center on Fed Chair Kevin Warsh’s signals for the months ahead, even though he has repeatedly indicated that the central bank will restrict the amount of forward-looking guidance it gives markets.

Treasury yields surged as investors positioned for a rate increase, with the benchmark 10-year yield reaching 5.03%, a near two-decade peak. Yields then reversed direction after Treasury Secretary Scott Bessent defended the Donald Trump administration’s economic policies and revealed plans for an upcoming summit with China.

Still, this week’s jump in yields unsettled markets, with technology shares singled out for especially heavy selling.

Technology stocks also came under pressure after several prominent artificial intelligence executives urged a slower pace of development for the technology, citing the potential dangers it could present to humanity.

The war in the Middle East remained a drag on Wall Street, as oil prices climbed near their yearly highs amid mounting supply disruptions.