S&P 500 slips as AI fears grow before Fed decision

The S&P 500 turned lower on Tuesday as concerns over AI demand hit technology shares, with Nvidia and Oracle declining. The Nasdaq Composite also fell sharply, while Coca-Cola rose after upbeat guidance. In London, the FTSE 100 edged higher as BP and Shell gained on stronger oil prices. Markets remained cautious ahead of the Federal Reserve decision and leadership transition.

Equities

The FTSE 100 closed 0.1% higher on Tuesday, ending a six-day losing run as rising oil prices supported energy shares. Strength in the sector came as geopolitical tensions continued to push crude prices higher, lifting major oil producers listed in London.

BP shares closed 1.1% higher after the company reported that first-quarter profit more than doubled compared with a year earlier. Rival Shell also rose 1.1% by the close, benefiting from the same uplift in energy prices. Tullow Oil surged 11.4% on Tuesday after forecasting annual production at the top end of its guidance following a strong start to the year. Meanwhile, Barclays edged 0.2% lower after announcing a smaller-than-expected share buyback and taking a sizeable provision linked to the collapse of lender MFS.

In the United States, the S&P 500 closed 0.49% lower on Tuesday, while the Nasdaq Composite dropped 0.90%, marking its sharpest daily fall in a month. The Dow Jones Industrial Average slipped 0.05%. Technology shares led the declines as concerns around artificial intelligence investment momentum weighed on sentiment ahead of major earnings releases.

Oracle fell 4.1% by the close amid scrutiny over its links to OpenAI and cloud growth prospects. Chipmakers were also under pressure, with Nvidia, AMD and Broadcom declining between 1.6% and 4.4%. CoreWeave dropped 5.8% in the same session.

Outside technology, General Motors rose 1.3% on Tuesday after beating quarterly profit expectations and raising its full-year outlook. United Parcel Service fell 4.0% after maintaining its annual revenue forecast despite higher fuel costs. Coca-Cola gained 3.9% following stronger-than-expected results and an upgraded earnings forecast.

Forex & Commodities

The United States dollar strengthened slightly early on Wednesday, holding firm as investors awaited the latest decision from the Federal Reserve. The euro slipped to 1.1710 against the dollar, while the British pound edged down to 1.3510, both easing back from earlier monthly highs. The dollar index steadied near 98.68, reflecting cautious positioning ahead of the policy announcement.

Attention remains firmly on the Federal Reserve, where interest rates are widely expected to be left unchanged later today. This meeting is likely to mark the final one chaired by Jerome Powell, with markets also watching closely for any signals about his future role at the central bank. Policymakers are balancing persistent inflation risks linked to elevated energy prices against the broader economic outlook.

The Japanese yen held near 159.6 per dollar early this morning, remaining close to levels that have previously prompted intervention by authorities. The Bank of Japan maintained a firm stance on policy, signalling that gradual rate increases remain possible if inflation pressures broaden beyond energy. Traders continue to monitor the 160 level closely for any official action.

Spot gold edged slightly lower early on Wednesday to around 4,591 per ounce, after touching its weakest level since early April in the previous session. Prices have come under pressure as expectations grow that US interest rates will remain elevated, even as geopolitical tensions linked to the Iran conflict persist. Central bank demand remains a longer-term support factor, with some forecasts pointing to further gains later this year.

Oil prices eased marginally this morning, with Brent crude holding near 111.3 per barrel after several days of gains. The market continues to be shaped by supply disruptions linked to the Strait of Hormuz closure and ongoing tensions involving Iran. The decision by the United Arab Emirates to leave OPEC has raised questions about future supply, though any increase in output is unlikely in the near term.