U.S. equities are under pressure Tuesday as oil extends its move above $100, the 10-year Treasury yield pushes above 5%, and investors prepare for an expected Fed rate hike Wednesday. At 4:36 a.m. ET, Dow futures were down 0.65%, S&P 500 futures were down 0.52% and Nasdaq 100 futures were down 0.58%. Monday, the Dow fell 0.29%, the S&P 500 declined 0.48%, the Nasdaq lost 0.56% and the Russell 2000 slipped 0.4%, led by a sharp selloff in semiconductor shares.
Treasury yields continue to reset higher. Monday’s 2-year yield rose 3 basis points to 4.66%, the 10-year gained 2 basis points to 4.99% and the 30-year held near 5.35%. Early Tuesday, the 10-year reached roughly 5.03%, its highest level since 2007, as markets price a 92%-94% probability of a 25-basis-point Fed hike Wednesday and increasingly anticipate additional tightening thereafter. The dollar remains firm, with the euro near $1.153 and sterling around $1.34.
October WTI gained 1.70% Monday to $101.75 and is up another roughly 2% near $103.8 this morning, while Brent is above $108. Fresh Houthi attacks have kept Saudi Arabia’s East-West pipeline offline, increasing concern about export capacity outside the Strait of Hormuz. December gold fell 1.86% Monday to $4,326.70 and U.S. gold futures are near $4,307, pressured by rising yields, a stronger dollar and expectations for tighter Fed policy.
The September FOMC meeting begins today, with the policy statement and updated economic projections due Wednesday at 2:00 p.m. ET, followed by Chair Kevin Warsh’s press conference. A Reuters poll found 85% of economists expect a 25-basis-point increase to 3.75%-4.00%, while markets put the probability above 90%. Wednesday also brings August import and export prices at 8:30 a.m. ET, along with retail sales and business inventories.
Sector Highlights
Sector performance was sharply divided Monday. Communication Services led with a 2.79% gain, followed by Health Care +1.35% and Consumer Staples +1.27%, while Financials declined 0.35%. Technology was the weakest sector at -1.67%, followed by Industrials -1.44%, Utilities -1.34%, Materials -1.03%, Energy -0.86%, Real Estate -0.78% and Consumer Discretionary -0.48%. Breadth was negative at 1.49:1 on the NYSE and 1.31:1 on the Nasdaq.
Information Technology
- Microsoft (MSFT -1%+ premarket) is lower as the market continues to reassess AI capital spending following calls from leading AI developers to slow frontier-model development. Microsoft, Alphabet, Amazon, Meta and Oracle are expected to spend nearly $800 billion on AI-related capital investment in 2026.
- Nvidia (NVDA) is roughly flat to modestly higher premarket after falling 3.4% Monday. Micron dropped more than 5%, while Broadcom and AMD each fell more than 4% as the Philadelphia Semiconductor Index plunged 5.9%.
- ServiceNow (NOW), Adobe (ADBE) and Workday (WDAY) remain relative beneficiaries of the AI-development slowdown debate after gaining roughly 4%-7% Monday. Investors are reassessing whether slower frontier-model progress could reduce the competitive threat facing established enterprise-software vendors.
- Apple (AAPL) is in focus after Elon Musk’s X and SpaceXAI resolved their antitrust claims against the company over Apple’s integration of OpenAI technology. The separate claims against OpenAI remain active.
Communication Services
- Alphabet (GOOGL -1%+ premarket) is giving back part of Monday’s sector-leading advance as higher yields and uncertainty around AI investment weigh on megacap growth shares. Alphabet remains one of the largest contributors to the roughly $795 billion of hyperscaler capital spending expected this year.
Consumer Discretionary
- Dave & Buster’s (PLAY -14% premarket) is plunging after second-quarter revenue missed Wall Street expectations. The reaction adds to evidence of uneven discretionary spending as higher borrowing costs and energy prices put additional pressure on consumers.
- Amazon (AMZN) remains exposed to both sides of the current AI debate: AWS is benefiting from record infrastructure investment, but any slowdown in frontier-model development could reduce the pace of incremental data-center spending.
Financials
- Bank of America (BAC) remains under pressure after falling 5.1% Monday. CEO Brian Moynihan expects third-quarter investment-banking fees to decline by at least 10%, to roughly $1.6-$1.8 billion, while sales and trading revenue is expected to remain approximately flat.
- Coinbase (COIN) and Strategy (MSTR) are down more than 4.5% premarket as bitcoin falls nearly 3%. Crypto-linked equities are being pressured by the combination of rising Treasury yields, a stronger dollar and expectations for tighter Fed policy.
- Citigroup (C) remains in focus after CFO Gonzalo Luchetti said the bank expects 2026 return on tangible common equity to exceed 11% and plans to increase share repurchases beyond the $13 billion completed in 2025.
Energy
- Exxon Mobil (XOM), Chevron (CVX), ConocoPhillips (COP) and Occidental Petroleum (OXY) remain supported by WTI above $103 and Brent above $108. The shutdown of Saudi Arabia’s East-West pipeline has raised concern that as much as 4% of global crude exports could face additional disruption if repairs are prolonged.
Chevron (CVX) is also expanding its global LNG portfolio across Argentina, the Eastern Mediterranean, Australia and Africa as buyers prioritize supply diversification following disruptions to Russian, Qatari and Middle Eastern gas flows.
