The Dow Jones Industrial Average fell around 280 points, or 0.5%, in early trading. The S&P 500 and Nasdaq Composite slipped about 0.1% each.
The benchmark 10-year Treasury yield briefly climbed above 5%, touching 5.041%, its highest level since 2007, before easing back to around 5.004%. Rising yields have weighed on stocks as investors assess the outlook for inflation, government spending and monetary policy.
The Fed’s policy decision is now firmly in focus, with Fed funds futures pointing to roughly a 90% probability of a 25-basis-point rate hike from the current 3.5%-3.75% target range. Investors will also closely watch the central bank’s updated economic projections and Fed Chair Kevin Warsh’s press conference for clues on the path of interest rates.
Some technology stocks rebounded after Monday’s AI-led selloff. Nvidia and Micron Technology gained about 1%, while Advanced Micro Devices and Intel rose more than 2%, helping limit losses in the broader market.
Also Read: What if the Federal Reserve doesn’t hike rates?
Oil prices remained elevated amid ongoing West Asia tensions. Brent crude futures rose about 1% to above $107 a barrel, while WTI crude gained around 1% to above $103. Crude prices have climbed after Saudi Arabia shut a key pipeline bypassing the Strait of Hormuz, while fresh attacks by Iran-backed Houthis added to supply concerns.
Investors are also assessing concerns around the outlook for artificial intelligence following an essay by Anthropic CEO Dario Amodei on AI safety risks, which added to the caution surrounding technology stocks.
With little major economic data or earnings due on Tuesday, market focus is expected to remain firmly on the Fed and the sharp moves in bond and oil markets.
Asian markets largely closed lower on Tuesday. Japan’s Nikkei 225 was little changed at 63,484.1, while South Korea’s Kospi fell 0.85% to 6,627.26.
Hong Kong’s Hang Seng Index declined 1% to 24,667.24, while mainland China’s CSI 300 dropped 0.67% to 4,450.04.
Also Read: Ahead of Fed meeting, Trump says US should have world’s lowest interest rate
