U.S. stock futures were generally flat on Tuesday ahead of the Federal Reserve's policy decision, where interest rates are widely expected to remain unchanged. Investors are closely monitoring the accompanying statement and comments from the new Fed Chair, Kevin Warsh, for clues on future monetary policy given persistent inflation, resilient growth, and strong demand from AI-related investments. Earlier in the week, strong rallies led major benchmarks to new highs, with the Dow Jones Industrial Average closing at a record high on Monday.
Optimism in the market is also influenced by progress toward a formal peace agreement between the United States and Iran, aiming to end over three months of conflict. While a preliminary framework has been welcomed, traders are awaiting additional details before increasing exposure to risk assets. This deal is also expected to prolong the current ceasefire by 60 days to allow for negotiations on Iran’s nuclear activities and enriched uranium reserves. The peace deal has led to a significant decline in crude oil prices, with Brent crude futures falling below $83 a barrel and WTI futures slipping 0.3% to $80.52 a barrel after an initial drop of over 4%. Goldman Sachs analysts lowered their Brent crude forecast to an average of $85 a barrel in the fourth quarter from $90. Lower energy prices are easing concerns about inflation, which prompted rallies in stocks on Monday, with the Nasdaq climbing 3.1%, the S&P 500 gaining 1.7%, and the Dow Jones rising 0.9%.
In other market movements, technology shares faced pressure as investors locked in profits after a robust rally in semiconductor stocks. Nvidia saw a decline of 2.4%, Broadcom fell 4.4%, Micron was down 6.2%, AMD dropped 7.3%, and Intel experienced an 8.5% fall. In contrast, SpaceX advanced 4.8% following its IPO, amid reports of a potential $60 billion acquisition deal with Cursor. On the economic front, markets are awaiting retail sales and pending home sales data, along with earnings reports from CarMax and Jabil. The yield on the U.S. 10-year Treasury bond was stable, hovering around 4.471%.
