U.S. stock futures slip ahead of Fed meeting as oil remains above $100

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U.S. stock futures slip

Highlights

Rising oil prices have reemerged as a major risk for U.S. equities.
Investors expect the Fed to hold rates steady, but signal continued vigilance on inflation.
After a tech-driven rebound, market attention has shifted back to macroeconomics and geopolitics.

Oil and the Fed return to the center of the market

According to Reuters, the main driver of sentiment remains the Middle East. Oil prices have surged as investors assess the risk of prolonged disruptions tied to the Strait of Hormuz, a critical route for global energy shipments. That renewed pressure in the energy market has pushed inflation concerns back to the forefront just as the Fed prepares to signal how it sees the balance between price stability and economic growth.

Against that backdrop, investors are reassessing the outlook for monetary policy. The central bank is still expected to leave borrowing costs unchanged at the end of its meeting on Wednesday. But the recent jump in oil prices, combined with ongoing uncertainty over the broader economic impact of the conflict, has made the path toward rate cuts less clear. Market pricing now points to just one 25-basis-point cut by the end of the year, down from roughly two expected before the latest escalation in the war.

Tech rebound loses momentum

Pressure on futures also reflected a cooling of the technology-led rebound from the previous session. On Monday, the S&P 500 posted its biggest one-day gain in more than a month, helped in part by Nvidia annual developer conference and fresh optimism around artificial intelligence.

Nvidia said the revenue opportunity for AI chips could reach at least $1 trillion through 2027, outlining a more aggressive strategy in the rapidly expanding market for real-time AI systems. Yet by Tuesday, that enthusiasm had faded into the background as investors shifted their attention from corporate growth narratives back to inflation, oil and interest rates.

Shares tied to travel and consumer sensitivity to fuel costs came under pressure in premarket trading, while energy companies gained support from the rise in crude. In effect, the market returned to a familiar pattern: higher oil prices increase inflation risks while reducing the room for the Fed to pivot quickly toward easier policy.

The next test for investors

The key question now is how long oil will remain near $100 a barrel and whether the Fed will treat the shock as temporary or persistent. With futures pointing lower and volatility still elevated, markets are signaling that even after a strong rebound in equities, investors are not prepared to dismiss the risk of a renewed inflation wave.

For Wall Street, that means the next few days will depend not only on what Chair Jerome Powell says, but also on whether oil continues to climb. That single variable has once again become central to how investors assess growth, interest rates and corporate earnings.

We also reported that Nvidia stock climbs 1.7% amid launch of Vera Rubin platform with seven new AI chips.

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