Stock market today: Dow, S&P 500, Nasdaq futures retreat ahead of Fed meeting amid AI safety fears

US Stock Futures Edge Lower Ahead of Federal Reserve Policy Meeting and AI Development Discussions

US stock futures declined modestly on Tuesday as market participants prepared for the Federal Reserve’s September policy decision scheduled for Wednesday and reviewed statements from technology executives regarding artificial intelligence development. Futures on the Dow Jones Industrial Average fell 0.2 percent, S&P 500 futures declined 0.2 percent, and Nasdaq-100 futures dropped 0.1 percent in early trading.

Oil prices remained elevated, with Brent crude trading at $102 per barrel and West Texas Intermediate crude at $103 per barrel. Prices have stayed high following the closure of Saudi Arabia’s East-West pipeline and recent attacks in the Middle East attributed to Iran-backed groups. The 10-year Treasury yield reached an intraday high of 5 percent on Monday, its highest level since 2023, before easing later in the session. The move reflected concerns over government spending and inflation.

The Federal Open Market Committee is set to begin its two-day meeting on Tuesday. Market pricing indicated a high probability of a rate increase, with the CME FedWatch tool showing an approximately 93 percent chance of a hike. The committee’s dot plot and Chairman Kevin Warsh’s press conference are expected to provide additional details on future policy direction. Limited economic data and corporate earnings are scheduled for release, including results from Forgent Power Solutions and Vera Bradley.

The dollar index rose above 99, reaching its highest level in two weeks. The gain occurred alongside higher oil prices and reduced appetite for risk assets, particularly shares tied to artificial intelligence. Christopher Wong, an FX analyst at OCBC, noted that the combination of higher crude prices, rising US yields, and weaker risk appetite supported the dollar. He added that further gains would likely depend on whether the Federal Reserve signals openness to additional policy tightening.

On Monday, several technology executives commented on the pace of AI model development following an essay by Anthropic chief executive Dario Amodei. Amodei wrote that AI laboratories should consider measures to limit potential harm, including slowing the release of more powerful systems and seeking government regulation of the sector.

OpenAI chief executive Sam Altman stated agreement with the call to moderate the development of frontier models. SpaceX chief executive Elon Musk wrote that Amodei was correct and reiterated prior warnings about AI risks, while indicating openness to peer review of AI models among companies. Nvidia chief executive Jensen Huang said during an appearance at the All In Summit that safety considerations are important but described predictions of human extinction from AI as unfounded. Microsoft released a preliminary code of conduct for AI development, stating that humans must retain meaningful control over the technology to support healthier, happier, and more productive lives.

Asian equity markets traded with limited direction on Tuesday. Investors assessed ongoing tensions in the Middle East, including a new attack by Yemen’s Houthis on Saudi Arabia and the postponement of planned talks between Gulf states and Iran. US crude rose 1.27 percent to $102.68 per barrel, while Brent increased 1.21 percent to $106.96 per barrel. Yokoo Akihiko, an analyst at Mitsubishi UFJ Bank, observed that markets remain focused on the possibility that higher oil prices could contribute to inflationary pressures and influence interest rate decisions.

The combination of geopolitical developments, commodity price movements, and statements on technology policy contributed to cautious trading ahead of the Federal Reserve and Bank of Japan meetings. No major changes were reported in other asset classes during the early session.