Closing Bell: Indexes Fall on Fed Watch as Oil Rises Again

On the eve of a potential Federal Reserve interest rate hike, the continued rise in oil prices fueled a decline in major indexes. 

The S&P 500 (/SPX) fell 0.45%, and the Dow Jones Industrial Average ($DJI) fell 0.63%. The Nasdaq-100 (/NDX) declined 0.65%, and the small-cap Russell 2000 (/RUT) was off by 0.76%. The S&P 500 and Dow are now down in 6 of the last 7 sessions. 

The U.S. WTI oil benchmark jumped roughly 4% to more than $105 per barrel, and the international Brent benchmark rose 2.6% to more than $108. 

A few stock headlines and moves of note from Tuesday’s markets: 

The CME FedWatch tool reflects a 94.5% probability that the FOMC will raise its benchmark federal funds rate by 25 basis points to between 3.75% and 4.00% on Wednesday. Meanwhile, the 10-year Treasury yield reached 5.02% Tuesday, its highest level since 2007. Should energy inflation and high yield persist, what will it mean for corporate earnings? See Crude & Yields' Greater Stock Market Impacts, Global Economies Eye Rate Hikes 

The Clarity Act did not clear a key procedural vote in the U.S. senate, which caused a 3.86% decline in Bitcoin Tuesday. See Clarity Act Fails Key Senate Vote: What's Next for Bitcoin, Other Crypto Assets? 

The S&P 500 energy sector, up 2.26%, was the best performing SPX sector Tuesday. WTI crude prices are up roughly 22% so far this month. Traders are monitoring pipeline outages resulting from damage last week to a Saudi Arabia East-West oil pipeline. It was expected to transit oil from the Persian Gulf and the Strait of Hormuz to Red Sea routes including the southern Bab al-Mandeb Strait to the open seas. Iran-backed Houthi rebels have gained ground in Yemen, threatening southern transit, according to reports. Saudi Crown Prince Mohammed bin Salman traveled north to Egypt, where he met with President Abdel-Fattah el-Sissi Tuesday, and said they share "commitment to ensuring freedom and security of maritime navigation,” without firm detail on future steps, according to a Tuesday AP report. See Crude Oil Supply Woes Will Take 'Quite a Bit of Time' to Fix

Meta Platforms (META) stock rose 0.70% Tuesday. The company is planning to roll out two new in-house custom AI inference chips, according to Bloomberg. The company also launched a new subscription service called Meta One that bundles advanced AI tools, app customization, and professional features across apps like Facebook and Instagram. See Three Picks From AI Chips to Beauty Filters | Market On Close 

Salesforce (CRM) shares slipped 1.46% Tuesday. It announced Koa, the company's first reasoning model, built on the Nvidia (NVDA) open-weight Nemotron model. 

Eli Lilly (LLY) shares were down 0.19% Tuesday after Berenberg upgraded the stock from Hold to Buy and raised its price target to $1,400 from $1,220. See Options Corner: LLY Upgrade Injects Bullish Stock Momentum 

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