Oil near $108 and a Fed hike in view push shares lower again

Into the close the S&P 500 stood 0.45% lower at 7,585.73, the Nasdaq Composite 0.78% down at 25,981.57 and the Dow 0.63% weaker at 52,093.11 — a second consecutive decline, with the Russell 2000 finishing 0.76% off at 2,870.29. Crude did the damage and the repair in equal measure: WTI has been trading 4.12% higher at $105.57 and Brent 2.59% up at $108.42, lifting energy shares while everything geared to the consumer fell away.

Europe closed modestly lower — the FTSE 100 off 0.37% at 10,658.13, the DAX down 0.15%, the CAC 40 0.34% lower and the Euro Stoxx 50 down 0.38%. Asia was the weak leg: the Nikkei 225 ended 0.82% down at 63,484.10, the Hang Seng 0.56% lower, the Shanghai Composite off 0.61%, and the KOSPI finished 4.09% lower at 6,627.26 as foreign selling of chipmakers continued.

The dominant fact of the day is that the Federal Reserve is widely expected to raise rates on Wednesday — a quarter point, and the first increase since 2023 — after August CPI held the annual inflation rate at 3.4%, with energy the main culprit. Futures pricing has run in the high 80s to low 90s in percentage terms, so the hike itself is not the issue; the question the tape is trading is how many follow. That is why the whole Treasury curve backed up again, the 10-year yield closing 3.5 basis points higher at 4.996% after touching what was reported as its highest intraday level since 2007, with the 30-year up 3.5bp at 5.364%.

Oil is the transmission belt. Supply disruption from Saudi Arabia's shuttered East–West pipeline and Houthi attacks has kept crude elevated, and a fresh leg higher today feeds straight back into the inflation forecast the Fed is about to act on. The equity response was internally consistent rather than panicked: energy the only meaningful winner, consumer discretionary the worst sector, and a bid for European defence and oil names — BAE Systems up 3.40%, Thales 4.12% and Shell 1.97%.

Crypto's move was its own story. Bitcoin is down 2.97% at $75,845, XRP 9.97% lower and Solana off 5.20% after the Senate declined to advance the digital asset market Clarity Act, effectively ending market-structure legislation for this year.

This was a de-risking session, not a scare. The VIX ended at 17.20, barely changed on the day and 51% below its 52-week high, while the MOVE index at 83.71 has climbed 9.08% over five sessions — the anxiety is in rates, not equities. Breadth confirms the global tilt: across PrimerIQ's listed universe, Asian decliners outnumbered advancers by better than two to one on Tuesday, with Europe at 0.73 advancers per decliner and the UK at 0.76. Sector dispersion was wide for a quiet index move — US energy up 2.17% against consumer discretionary down 1.75% and utilities off 1.20%, a spread of nearly four points. The classic haven did not work: gold slipped 0.45% to $4,332.20 as the dollar index firmed 0.19% to 99.648 and the yen weakened 1.11% to 155.13 per dollar, leaving cash and crude as the day's refuges.

The only US data of consequence today was the New York Fed's Empire State manufacturing survey at 08:30 EDT (13:30 BST), which came in at 7.6 against expectations near 14.8 — still expansionary, but a sharp step down, with input and selling price increases accelerating from already elevated levels. That combination, softer activity alongside faster prices, is precisely the bind facing policymakers.

The FOMC began its two-day meeting today; the decision and statement land at 14:00 EDT (19:00 BST) on Wednesday, followed by the press conference. August retail sales are scheduled for 08:30 EDT (13:30 BST) Wednesday, the same morning, giving the consumer read just hours before the rate call.

Nothing of consequence reported during the session itself. Trip.com Group was scheduled to release second-quarter and first-half results after the US close, against consensus of 84 cents a share and company guidance for net revenue growth of roughly 3% to 8% year on year; the figures had not crossed by the time of writing. The residue of Monday's US session still dominates the movers list, where cybersecurity names ran hard — Zscaler up 16.52%, CrowdStrike 13.85%, Palo Alto Networks 13.09% — while optical and semiconductor test suppliers were routed, Corning down 13.70% and Teradyne 13.30%.