US Stock Futures Rise as Markets Brace for Fed Rate Hike

U.S. stock futures edged higher Tuesday evening as investors remained cautious ahead of the Federal Reserve’s highly anticipated interest rate decision. Elevated oil prices, Middle East tensions and rising Treasury yields continued to weigh on market sentiment.

S&P 500 futures gained 0.1% to 7,663.50 points by 19:25 ET, while Nasdaq 100 futures rose 0.1% to 29,274.0. Dow Jones futures also advanced 0.1% to 52,574.0.

The modest gains followed two consecutive losing sessions on Wall Street. Investors have reduced exposure to risk assets amid higher crude oil prices, weakness in artificial intelligence stocks and expectations that the Fed will tighten monetary policy on Wednesday.

Markets widely expect the Federal Reserve to raise its benchmark interest rate by at least 25 basis points to 4.0% at the conclusion of its two-day meeting. Expectations for a rate hike strengthened after several policymakers expressed concern about persistent inflation, while August economic data showed price pressures remained elevated.

Attention will also turn to Fed Chair Kevin Warsh for clues about the central bank’s monetary policy outlook. However, Warsh has indicated that the Fed intends to provide less forward guidance to financial markets.

U.S. Treasury yields surged ahead of the Fed decision, with the benchmark 10-year yield briefly reaching 5.03%, its highest level in nearly two decades. Yields later pulled back after Treasury Secretary Scott Bessent defended the Trump administration’s economic policies and revealed plans for an upcoming summit with China.

The recent bond market selloff has placed particular pressure on technology stocks. AI-related shares have faced additional selling after several prominent artificial intelligence executives called for slower development because of concerns about potential risks associated with the technology.

Geopolitical uncertainty is adding another layer of caution. Continued military tensions in the Middle East have pushed oil prices close to their yearly highs as supply disruptions intensify.

Investors are now focused on Wednesday’s Fed decision and Warsh’s comments for signals about the path of U.S. interest rates, inflation and financial markets in the months ahead.