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Markets hold steady as Fed decision looms amid AI rout and higher yields
2 hours ago•Source: CNBC
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4.86 min•9 hours ago
Markets set to open lower as AI pace debate, oil spike, and debt ceiling loom
CNBC’s Morning Squawk flags five pre-market themes: AI leaders urge a slower pace of development amid regulatory scrutiny and IPO caution; crude oil rises after Saudi Arabia closes a pipeline, tightening supply; the U.S. debt ceiling is expected to be breached next year, fueling a political showdown; inflation is rising faster than wages, reducing purchasing power; and prediction markets prepare for a busy fall season with the NFL and midterms, while Nasdaq 100 futures slip as AI stocks slide.
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Chip stocks slip as AI-safety slowdown calls spook markets
NVIDIA stock slipped in premarket trading as AI-safety concerns and calls for a slowdown in AI development rattled the chip sector, with Broadcom, Intel, and Marvell dropping after AI leaders including Anthropic’s Dario Amodei and OpenAI’s Sam Altman urged caution on advancing powerful models. Futures for major indices were down as oil climbed, and investors awaited the Federal Reserve’s policy meeting.
Oil Rises, Stock Futures Dip Ahead of Fed Decision
Stock futures fell Sunday evening ahead of the Federal Reserve's rate decision, with Nasdaq-100 futures down about 1.1%, S&P 500 futures down about 0.5%, and Dow futures down around 0.3%; oil climbed more than 2% to above $106 a barrel for Brent and around $102 for WTI as traders price in a rate hike by Fed Chair Warsh while markets brace for the decision.
Anthropic AI warning triggers tech selloff as oil climbs ahead of Fed meet
U.S. stock futures slid after Anthropic and OpenAI urged slowing AI development, with Nasdaq-100 futures down about 1.8% while Dow and S&P 500 futures also eased; oil prices jumped on Middle East tensions ahead of the Federal Reserve meeting, as investors weigh AI safety concerns and related IPO news.
Yen Rally Pushes Traders to Eye CNH and CAD for Carry Trades
The yen’s strength has traders seeking new carry-trade funding sources, with offshore yuan and the Canadian dollar emerging as contenders; the yen has risen about 6% against the dollar since July, and while hawkish BOJ signals and potential rate hikes support the move, analysts expect rotation rather than an end to yen carry trades, as CNH and CAD offer competing carry dynamics and funding options.
Treasury Yields Hold Steady as 10-Year Nears 5% Ahead of Fed Decision
U.S. Treasury yields were little changed with the 10-year hovering near 5% as August CPI rose 0.4% (3.4% year), keeping inflation pressures in focus ahead of the Federal Reserve’s rate decision. Fed funds futures imply about an 86.7% chance of a 25 basis-point hike, while the 2-year yield sits near 4.61% and the 30-year around 5.36%, highlighting supply-demand dynamics and potential risks in the Treasury market as investors weigh the path of rates and growth.
AI stock pullback deepens as leaders urge development restraint
Global AI stocks fell after leaders from Anthropic, OpenAI and SpaceX urged slowing the pace of AI development amid safety concerns. SoftBank’s stake in OpenAI contributed to a about 13% drop, with Asian tech indices and memory-chip makers also sliding, though some investors welcomed tighter oversight as a potential source of sector stability.
Oil climbs toward $108 as Hormuz talks with Iran are postponed
Oil prices rose toward $108 a barrel, with Brent up about 3.5% at market open, after Gulf states postponed a crunch meeting with Iran on managing the Strait of Hormuz. The delay, tied to a lack of consensus among Gulf partners, postpones efforts to reopen shipping through the chokepoint amid broader regional tensions, including Iran’s shipping restrictions and attacks on energy infrastructure in the region. The Oman‑led discussion and wider diplomacy remain fragile as the US‑Iran standoff persists.
Crop prices surge as broad commodity rally tightens inflation outlook
A surge in crop prices for wheat, corn and soybeans runs alongside higher energy costs, widening inflation pressures beyond oil. Analysts point to factors like lower U.S. yields, strong farm inputs costs, a fresh China soybean sale, and geopolitical shipping disruptions, and note a macro backdrop of yen debasement, de-globalization, and a capex boom in AI/renewables. The Bloomberg Commodity Index sits near multi‑year highs, and history shows periods of hot commodities often correspond with weaker S&P 500 returns, signaling potential ripple effects for consumers and investors alike.
Oil Markets Defy Disruption as Iran Conflict Drags On
Despite a protracted conflict with Iran, the oil market has remained functional and resilient. Countries rerouted crude around the Strait of Hormuz, big stockpiles remain, and global demand has fallen, helping to keep prices from spikes even as about 13 million barrels per day were temporarily removed from the market. JPMorgan and other analysts see the new normal potentially lasting for some time, with Brent prices around the upper $80s if the war endures; if the war ends, prices could fall toward the mid-$60s. However, several experts warn that extended tensions could deplete inventories and trigger higher volatility and prices, possibly forcing an end to the conflict. Risks include storage at critical lows (like Cushing), costly military escorts, and ongoing constrained Hormuz exports through next year, suggesting the market may not return to pre-war calm anytime soon.
Analysts back trio of dividend-energy plays for steady income
TipRanks-tracked analysts highlight Energy Transfer (ET), Permian Resources (PR), and Sempra Energy (SRE) as dividend-paying picks with solid cash flow and growth potential. ET yields about 6.3% (annualized $1.36), PR about 2.7% ($0.64), and SRE about 3.1% ($2.63). JPMorgan’s Jeremy Tonet reiterates Buy on ET with a higher target after a Q2 beat and EBITDA guidance raise; Goldman Sachs’ Neil Mehta lifts PR’s target on improved oil growth and free cash flow; Jefferies’ Julien Dumoulin-Smith upgrades SRE amid Texas capex plans. The picks underscore income with upside from energy infrastructure and utilities in a volatile market.