Key facts
- U.S. stock index futures declined Tuesday amid rising oil prices, higher Treasury yields, and AI demand uncertainty.
- Top AI companies have called for a slowdown in development due to safety concerns.
- The Federal Reserve is expected to raise interest rates on Wednesday, with traders pricing in a 92% chance of a hike.
- Brent crude futures rose over 2% to $108.06, and WTI futures were up over 2% at $103.76.
- The 10-year U.S. Treasury note yield reached its highest level since 2007, trading at 5.0286%.
- Consumer prices accelerated in August, with a key inflation measure showing its largest increase in four months.
U.S. stock index futures slipped on Tuesday as investors grappled with rising crude oil prices, elevated Treasury yields, and an uncertain outlook for AI demand. Several tech stocks, including Alphabet and Microsoft, fell premarket, while chipmakers traded within a narrow range, with Nvidia showing a marginal rise.
The latest anxiety stemmed from calls by top AI companies to slow down the development of the technology due to safety concerns. While the specifics of such a slowdown remain unclear, the declines have added to market gloom, compounded by above-target inflation and fears of higher borrowing costs.
The Federal Reserve is widely expected to raise interest rates on Wednesday, with traders pricing in a 92% chance of a hike. 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%).
Meanwhile, elevated oil prices persisted due to the Middle East conflict, with Brent crude futures rising more than 2% to $108.06 and U.S. West Texas Intermediate futures trading at $103.76, also up over 2%. The yield on the benchmark U.S. 10-year Treasury note hit its highest level since 2007, reaching 5.0286%.
Economic data has also contributed to investor unease, with consumer prices accelerating in August and a key measure of underlying inflation posting its largest increase in four months. Shares of Dave & Buster's tumbled nearly 14% premarket after missing revenue expectations, and crypto stocks fell following a slide in bitcoin.