U.S. stock futures drift higher with Fed rate hike in focus

U.S. stock index futures rose slightly on Tuesday evening with markets turning largely cautious before a widely expected interest rate hike by the Federal Reserve.

High oil prices, amid continued military tensions in the Middle East, also kept markets on edge, as did surging Treasury yields.

S&P 500 Futures rose 0.1% to 7,663.50 points by 19:25 ET (23:25 GMT). Nasdaq 100 Futures rose 0.1% to 29,274.0 points, and Dow Jones Futures rose 0.1% to 52,574.0 points.

Futures rose after two straight days of losses on Wall Street, as rising oil prices, a rout in artificial intelligence stocks, and anticipation of a Fed rate hike on Wednesday spurred selling in risk-driven markets.
Fed meeting on tap, yields surge in anticipation of 25 bps hike
The Fed is widely expected to raise interest rates by at least 25 basis points to 4.0% at the conclusion of its two-day meeting on Wednesday.

Bets on a hike were fueled by several policymakers voicing concern over increasingly sticky inflation, with data for August, released last week, also highlighting elevated price pressures.

Beyond the hike, focus will be squarely on Fed Chair Kevin Warsh’s guidance for the coming months, although the Fed chair has repeatedly signaled that he will limit how much forward-looking information the central bank provides to markets.

Treasury yields soared in anticipation of a rate hike, with the benchmark 10-year yield hitting a near two-decade high of 5.03%. But yields reversed course after Treasury Secretary Scott Bessent defended the Donald Trump administration’s economic policies, while also disclosing plans for an upcoming summit with China.

But the spike in yields rattled markets this week, with technology stocks in particular being sold down harshly.

Tech was also pressured by several major artificial intelligence executives calling for a slowdown in development of the technology due to the potential risks it could pose to humanity.

War in the Middle East continued to weigh on Wall Street, with oil prices surging close to their annual peaks amid growing supply disruptions.