Retail sentiment on SPY and QQQ remained ‘extremely bearish’ ahead of the Fed’s rate decision this week.

  • The 10-year Treasury yield briefly crossed 5% while oil stayed above $100 a barrel, raising fresh inflation concerns.
  • This comes a day ahead of the Fed’s rate decision, with the markets pricing in a 92% probability of a rate hike this week. 
  • AI-linked stocks remained in the spotlight after calls to slow frontier-model development.

U.S. stock futures were lower early Tuesday as rising Treasury yields, geopolitical friction and concerns around a potential slowdown in AI development weighed on investor sentiment ahead of the Federal Reserve’s policy decision this week. 

As of 4:00 a.m. ET, Nasdaq and Dow futures declined 0.7%, S&P 500 futures fell 0.6%, and Russell 2000 futures fell 0.8%. On Stocktwits, retail sentiment for the SPDR S&P 500 ETF (SPY), an exchange-traded fund that tracks the S&P 500 Index, and Invesco QQQ Trust (QQQ), which tracks the Nasdaq-100 Index, has remained ‘extremely bearish.’ 

Fed Decision Looms Wednesday 

Treasury markets remained under pressure, with the 10-year Treasury yield briefly moving above 5%, its highest level in nearly two decades, while Brent crude climbed above $105 a barrel amid escalating Middle East tensions.

The Federal Reserve begins its two-day policy meeting today, with the decision and updated economic projections due Wednesday. According to CME Fedwatch data, traders are pricing in a 92.3% probability of a 25-bps rate hike. Meanwhile, a Stocktwits poll shows that 43% of retail investors expect no change, while 41% polled see a rate hike this week.

The Fed held its target range at 3.50%-3.75% in July, although three policymakers dissented in favor of a 25-basis-point hike. The bigger focus will be on what Fed Chair Kevin Warsh signals about the path beyond this week’s meeting. 

AI Stocks Remain In Spotlight

The cautious tone follows a bruising session for semiconductor stocks on Monday. Nvidia, Micron, AMD, SanDisk, Nebius and other AI-linked names came under pressure as investors reacted to calls from AI executives for a slower pace of frontier-model development. 

Meanwhile, President Donald Trump and Nvidia CEO Jensen Huang pushed back against the calls during Monday’s All-In Summit. Trump, who called AI fears a “hoax,” argued against slowing development, while Huang defended continued AI investment and said America needed to maintain its lead in the AI race. 

Micron Technology (MU): Remains in the spotlight amid two catalysts: the broader AI-memory demand story and labor tensions in Taiwan. Micron’s Taiwan union is reportedly pressing for a larger profit-sharing payout and maintaining strike preparations. 

SanDisk (SNDK), SK Hynix (SKHY): Reports that Japanese memory maker Kioxia is considering raising at least $10 billion through a Nasdaq ADR listing, which could add another layer to the increasingly crowded memory trade.

Apple (AAPL): Apple remains on the retail radar as it rolls out the next-generation Siri AI with iOS 27.

Trending Stocks

Tesla (TSLA), SpaceX (SPCX): Elon Musk declined to rule out a potential merger between the two companies, adding fresh fuel to the tie-up buzz. He highlighted the companies' “close collaboration” across multiple areas, hinting that the relationship could eventually lead to further action. 

Rocket Lab USA (RKLB): CFO Adam Spice said the proposed Iridium combination would effectively double the company’s size “overnight,” while suggesting further space-sector deals could follow. 

Viking Therapeutics (VKTX): Under scrutiny after its CEO highlighted that patient tolerability, avoiding GI side effects on monthly weight-loss injections, remains the key hurdle for its candidate VK2735.

Nokia (NOK): Shares rose over 1% in early premarket trade after Rosenblatt initiated coverage with a Buy rating and said the company offers an underappreciated AI-optical opportunity at a telecom-style valuation. The stock is also set to join the Euro Stoxx 50 this week. 

AeroVironment (AVAV): Cathie Wood’s ARK Invest bought about 29,000 shares, worth roughly $4 million, while an AeroVironment unit also recently won a nearly $100 million Air Force space contract.

Other tickers trending on Stocktwits at the time of writing included Gap Inc (GAP), Compass Pathways (CMPS), Oklo Inc (OKLO) and Redwire Corp (RDW).

CLARITY Act: Senate Procedural Vote Today 

Crypto equities will be in focus (CRCL, MSTR, COIN) as Crypto Clarity Act legislation heads for a critical Senate vote today. The legislation requires 60 votes to advance, with the vote expected around 2:15 p.m. ET. Separately, lawmakers are scheduled to vote September 16 on legislation establishing a permanent Strategic Bitcoin Reserve under the Treasury Department.

What Else To Watch Tuesday 

On the economic front, investors await the release of the ADP employment report, Empire State manufacturing index, and API Crude report later today.

On the earnings front, Castor Maritime Inc (CTRM), Forgent Power Solutions Inc. - Ordinary Shares - Class A (FPS), Vera Bradley (VRA), Evolution Petroleum (EPM), and Trip.com (TCOM) report today. 

For updates and corrections, email newsroom[at]stocktwits[dot]com<