S&P 500, Nasdaq, Dow End Lower As Investors Price In Rate Hike Ahead Of Fed Meeting — AMZN, META, MU, TSLA, PLTR In Focus

• The S&P 500 ended Tuesday 0.5% lower, while the Nasdaq 100 slipped 0.7% and the Dow Jones Industrial Average eased 0.6%.
• Benchmark 10-year yields hit 5%, the highest level in nearly two decades.
• Meta plans to begin deploying an in-house AI chip in data centers by next year.

U.S. stock indices fell on Tuesday as Treasury yields spiked to multi-year highs, with investors pricing in a Federal Reserve rate hike at its interest rate meeting on Wednesday. 

The S&P 500 ended Tuesday 0.5% lower, while the Nasdaq 100 slipped 0.7% and the Dow Jones Industrial Average eased 0.6%. The Russell 2000, which tracks stocks with small market capitalizations, fell about 0.8%.

Among ETFs tracking benchmark indexes, the SPDR S&P 500 ETF (SPY) fell 0.4%, and Invesco QQQ Trust (QQQ) ended Tuesday 0.6% lower, while the SPDR Dow Jones Industrial Average ETF Trust (DIA) was down 0.5%.

Meanwhile, the VanEck Semiconductor ETF (SMH) added 0.2%, while the iShares Semiconductor ETF (SOXX) dropped 0.6%, tracking weakness in Advanced Micro Devices (AMD), Nvidia (NVDA) and Micron Tech (MU). The broader Vanguard Information Technology ETF (VGT) ended 0.2% lower.

Retail sentiment on Stocktwits for QQQ, SPY, and DIA was ‘bearish,’ with ‘high’ message volumes. 

US Market Drivers

Benchmark 10-year Treasury yields touched 5.041% on Tuesday, climbing to their peak since 2007. The 10-year rate subsequently pulled back from session highs, recently trading up over 3 basis points around 5%. The iShares 20+ Year Treasury ETF (TLT) eased 0.3%. 

Moreover, global crude prices extended gains on Tuesday, with Brent crude oil futures rising almost 3% to end the session at $108.75 a barrel, while WTI futures advanced more than 4% to $105.83. 

As oil and yields continue to spike, investor attention this week will remain focused on the Federal Reserve’s September policy meeting announcement due on Wednesday. Fed funds futures traders are pricing in a roughly 92% likelihood of a rate hike, according to CME’s FedWatch tool.

“The debate has shifted from ‘if’ to ‘how much’ tightening this cycle will require to restore price stability,” Seema Shah at Principal Asset Management told Bloomberg. “A one-and-done hiking approach is unlikely.” 

Key Trending Stocks

Amazon (AMZN): Amazon Web Services (AWS) has suffered permanent data loss at several of its Middle Eastern server facilities as a direct result of the ongoing US-Iran conflict. 

Meta Platforms (META): The company is reportedly planning to launch its next-generation in-house artificial intelligence chips in the first half of 2027 

Micron Technology (MU): The company announced it had demonstrated the first 512GB DDR5 registered dual in-line memory module (RDIMM) across multiple server platforms. 

Tesla (TSLA): U.S. auto safety regulator pressed the company for more details on its dedicated robotaxi offering 

Palantir Technologies (PLTR): The cybersecurity firm looks relatively cheap compared with AI-linked software peers, according to UBS, which expects the stock to rebound as demand for its artificial intelligence-linked software services gains traction. 

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