Oil Price Surge, Rate Hike Fears Send US Stocks Lower
Major US stock indexes are set to open lower on Tuesday due to rising oil prices and elevated Treasury yields, compounded by uncertainty over AI demand.
The latest bout of anxiety was driven by calls from top AI companies to slow the development of the technology, citing safety concerns. While there is little clarity on how such a slowdown would work, the declines have added to market gloom at a time when above-target inflation and fears of higher borrowing costs have already clouded the backdrop for equities.
The Federal Reserve is expected to raise interest rates, with traders pricing in a 92.5% chance of a hike on Wednesday. Oil prices remain elevated due to the ongoing Middle East conflict, with Brent crude futures up 0.6% at $106.31 and US West Texas Intermediate futures trading at $102.59.
The yield on the benchmark U.S. 10-year Treasury note has hit its highest since 2007, as investors girded for what many suspect will be just the first in a series of rate increases.