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US Equity Futures Drop Pre-Bell as 10-Year Treasury Yield Surpasses 5% Ahead of Fed Decision

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US equity futures were edging lower pre-bell Tuesday as the 10-year Treasury yield hovered above 5% ahead of the Federal Reserve's interest-rate decision on Wednesday.

Dow Jones Industrial Average futures were 0.3% lower, S&P 500 futures were down 0.2%, and Nasdaq futures were 0.1% lower.

The benchmark 10-year Treasury yield climbed to its highest level since 2007, reaching as much as 5.041% before edging back to around 5%.

President Donald Trump said that claims that artificial intelligence is "taking over the world" are a hoax, after tech leaders called for a slowdown in the advancement of AI models. "AI and Data Centers will be the Greatest Economic Development Engine in History -- Bigger than Oil, Gold, Diamonds, or even the Internet," Trump said in a post on Truth Social.

The Federal Reserve policy session starts Tuesday and concludes with a rate announcement on Wednesday. There is a 92.5% chance the Fed will raise rates by 0.25%, according to the CME Group FedWatch indicator.

Oil prices were higher, with front-month global benchmark North Sea Brent crude up 0.2% at $105.90 per barrel and US West Texas Intermediate crude 0.9% higher at $102.27 per barrel.

The September Empire State manufacturing index, slated for release at 8:30 a.m. ET, is seen at 15.0 versus 20.6 previously, according to estimates compiled by Bloomberg.

What else is happening in Japan?

Japan

NZX Midday Sector Update: Commercial Services Advance, Industrial Services Decline

Commercial services shares gained the most on the New Zealand Exchange, rising nearly 2% by midday Tuesday.PGG Wrightson (NZE:PGW) gained almost 4% in recent trade.Meanwhile, the energy minerals sector fell 3%.Channel Infrastructure (NZE:CHI, ASX:CHI) shares fell 3% in recent trade.

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Japan

US Equity Markets End Lower as 10-Year Yield Tops 5%, Oil Advances

US equity indexes ended lower Monday after US 10-year Treasury yields topped 5% for the first time since 2023 and oil prices rose.* Yemen's Houthis launched a large-scale ballistic missile and drone attack on Saudi Arabia's King Khalid Air Base in Khamis Mushait and claimed "direct hits," Al Jazeera reported.* Ahead of the Federal Reserve's monetary policy meeting on Wednesday, the likelihood of an interest rate increase by 25 basis points rose to 92.3%, up from 33.1% a month earlier, according to the CME FedWatch tool.* October West Texas Intermediate crude oil rose $1.77 to settle at $101.82 per barrel, while November Brent crude, the global benchmark, was last seen up $1.65 at $106.26.* Corning (GLW) shares fell 14%, the steepest drop on the S&P 500, after the company unveiled plans late Friday for the sale of up to $2 billion of its common stock through an at-the-market equity program.* CrowdStrike Holdings (CRWD) rose 14%, the biggest gain on the S&P, as escalating concerns about AI risks lifted cybersecurity sentiment.

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Japan

Update: US Equity Indexes Off Session Lows in Final Leg of Trading

(Updates with index/price moves and geopolitical news from the first paragraph.)US equity indexes declined, albeit off session lows, after the 10-year benchmark government bond yield breached 5% and crude oil prices rose.The Nasdaq Composite fell 0.3% to 26,249.1, the S&P 500 declined 0.4% to 7,629.2, and the Dow Jones Industrial Average slipped 0.2% to 52,454.8 ahead of Monday's close.US Treasury yields were mixed in the final leg of trading. After hitting a high of 5.01% intraday, the 10-year yield was little changed at 4.97%.Iran wants to reach a deal with Washington, President Donald Trump said Monday. "The failing Nation of Iran wants to make a deal, quickly and badly. I will determine whether or not the U.S.A. will choose to engage - The concept of which we are open to," Trump wrote in a social media post on Truth Social.Meanwhile, Saudi Arabia is seeking to further boost oil supply through the Strait of Hormuz after attacks forced it to halt a key pipeline that's been the main alternative route for getting its crude to global markets during the Iran war, Bloomberg reported, citing a person familiar with the matter. The kingdom had been raising shipments through the contested Hormuz waterway in the first 10 days of this month from August levels, and is now trying to increase supplies further, the person told the news agency.The front-month US West Texas Intermediate crude oil contract rose 0.9% to $100.92 per barrel, and the global benchmark North Sea Brent edged up 0.7% to $105.34 per barrel.

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