U.S. stock index futures slipped on Tuesday as the Israel-Iran conflict entered its fifth day, dampening global investor confidence ahead of the Federal Reserve's upcoming monetary policy decision. Iran and Israel's air war, which began on Friday when Israel attacked Iran's nuclear facilities, has raised concerns that the conflict could create bottlenecks for oil exports from the oil-rich Middle East.
U.S. energy stocks rose in premarket trading as oil prices remained elevated on the uncertainty. Chevron (CVX.N), opens new tab and Exxon (XOM.N), opens new tab edged up 0.7% each, while Occidental Petroleum (OXY.N), opens new tab advanced 1%, and Devon Energy (DVN.N), opens new tab gained 1.4%. The surge in oil prices comes ahead of the Fed's monetary policy decision on Wednesday, when policymakers are widely expected to keep interest rates unchanged. Money market moves show traders are pricing in about 49 basis points of rate cuts by the end of 2025, with a 59% chance of a 25-bps rate cut in September, according to CME Group's FedWatch tool. At 7:04 a.m. ET, Dow E-minis were down 221 points, or 0.52%, S&P 500 E-minis were down 30.75 points, or 0.51%, and Nasdaq 100 E-minis were down 120 points, or 0.55%.
Key data for the day includes monthly retail sales and import prices scheduled at 8:30 a.m. ET. U.S. Senate Republicans late on Monday unveiled proposed changes to President Donald Trump's sweeping tax-cut bill that had cleared the House of Representatives in May. "The Senate's version of tax legislation looks broadly similar to the House-passed version in its near-term fiscal effects but would likely cost ... a few hundred billion dollars more over the next decade," said Goldman Sachs strategists in a note. Solar stocks dipped after the Senate's changes to Trump's tax-cut bill revealed a phase-out of solar, wind and energy tax credits by 2028. Shares of Enphase Energy (ENPH.O), opens new tab, which makes solar inverters, dropped 16.8%. Solar panel sellers Sunrun (RUN.O), opens new tab fell 28.3% and SolarEdge Technologies (SEDG.O), opens new tab dropped 21.2%. First Solar (FSLR.O), opens new tab lost nearly 12%. The Federal Reserve starts its two-day meeting this Tuesday with the Bank of England following on Thursday as geopolitical risks loom increasingly large in the minds of policymakers.
Shares of nuclear power companies rose after the Senate extended credits for nuclear energy to 2036. Oklo (OKLO.N), opens new tab was up 2.8% and Nano Nuclear Energy (NNE.O), opens new tab rose 2.6%. As investors flock to traditional safe-haven assets amid heightened geopolitical uncertainty, a rise in U.S. Treasuries pushed yields lower across the curve. Yields on the benchmark 10-year fell about 4 basis points to 4.41%.
