Fed Rate Hike Looms Amid Rising Yields, Geopolitical Tensions

The US stock market is bracing for a potential rate hike from the Federal Reserve on Wednesday, amidst rising Treasury yields and geopolitical tensions.

The 10-year Treasury yield briefly crossed 5% on Tuesday, its highest level in nearly two decades, while Brent crude climbed above $105 a barrel amid escalating Middle East tensions.

Ahead of the Fed's policy decision, investors are pricing in a 92.3% probability of a 25-basis-point rate hike, according to CME Fedwatch data.

The markets' cautionary tone follows a bruising session for semiconductor stocks on Monday, with AI-linked names like Nvidia and Micron coming under pressure as investors reacted to calls for a slower pace of frontier-model development.