Fed Rate Hike Looms as Oil Prices, AI Uncertainty Weigh on Markets

The Federal Reserve is expected to raise interest rates on Wednesday, with a 25-basis-point hike priced in at an 85% probability. Investors will focus on the policy statement and Chair Kevin Warsh's press conference for clues on future rate increases. Rising energy prices and concerns about artificial intelligence investment add to market challenges, with more than half of the S&P 500 sectors linked to AI. A slowdown in AI investment could benefit some tech companies but pressure chip and infrastructure stocks. The bond market will be closely watched, with hyperscaler borrowing potentially increasing demand for US Treasuries.