Federal Reserve policymakers consider AI demand and the oil shock as key inflation drivers. Traders now see a 50.9% chance the central bank will increase interest rates by at least 25 basis points in October, following this month's hike, the CME Group's FedWatch Tool showed.
Remarks from at least three central bankers — Fed Vice Chair Philip Jefferson, New York Fed President John Williams and Richmond Fed President Thomas Barkin — are expected later in the day.
Among others, bitcoin BTC= retreated 1.1% from a seven-month high, dragging crypto stocks Strategy MSTR.O and Coinbase COIN.O lower.
Futures steady as investors watch Middle East talks
Wall Street's main indexes were steady on Tuesday, following strong AI-driven gains in the previous session, while investors awaited potential talks between the United States and Iran that could end their six-month-old conflict.
Brent crude LCOc1 eased 1.6% and was within reaching distance of $100 a barrel, while the yield on the benchmark 10-year Treasury note US10YT=RR was at 4.9% - both hovering near levels that spurred market direction in recent days - as investors held their ground ahead of key events later this week.
Investors weighed comments by a senior Iranian official to Reuters that Tehran could reopen the Strait of Hormuz within seven days if the US eases pressure. Saudi Arabia also restarted operations at its East-West Pipeline, according to three sources.
US-Iran talks are expected on the sidelines of this week's United Nations General Assembly meeting, followed by a US-China summit on Thursday. Traders hope it will yield a resolution on the Middle East conflict and extend the trade truce with Beijing. President Donald Trump is also scheduled to meet several world leaders later in the day.
An extension of the truce or clearer communication could help reduce near-term political uncertainty, UBS analysts said. "China's policy priorities are likely to remain primarily domestic, but a summit that reinforces predictability in the bilateral relationship could support business confidence and reduce the risk of abrupt escalation."
Mag 7 and chip stocks mixed after record Nasdaq close
The tech-heavy Nasdaq .IXIC closed at a record high on Monday, driven by an 11.3% jump in Meta META.O as analysts pointed to its Muse AI agent garnering more downloads in its first 13 days than ChatGPT.
In premarket trading, Meta eased 0.5%, while Alphabet GOOGL.O climbed 0.6%, Amazon.com AMZN.O edged up 0.4% and Microsoft MSFT.O inched up 0.8%.
On the flip side, chip stocks that have been the biggest beneficiaries of the AI trade this year were lower: Nvidia NVDA.O eased 0.1% and US-listed shares of TSMC TSM.N and SK Hynix SKHY.O lost around 1% each.
"Muse provides early evidence that consumer AI agents could achieve broad adoption, offering new AI monetization opportunities beyond enterprise application," UBS said.
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