US investors fear Fed interest rate hikes and rising oil prices

US investors are looking at the Fed like a rabbit before a snake. The central bank will announce its interest rate decision tomorrow - in all likelihood this will be the first increase in three years. US stocks are falling in advance.

Fears of rising interest rates and rising oil prices sent investors on Wall Street fleeing on Tuesday. The Dow Jones standard value index lost 0.6 percent to 52,093 points. The technology-heavy Nasdaq fell 0.8 percent to 25,982 points and the broad S&P 500 lost 0.4 percent to 7,586 points.

The focus of interest was the US Federal Reserve, which ends its two-day interest rate meeting on Wednesday. With a robust labor market and inflation fueled by the war in the Middle East, investors are firmly expecting a 25 basis point rate hike. It would be the first increase in more than three years.

In advance, the yield on ten-year US government bonds climbed above the five percent mark, reaching its highest level since 2007. The yield on the interest-sensitive two-year bond rose to 4.661 percent.

Meanwhile, geopolitical tensions and new attacks on Saudi Arabia's energy infrastructure continued to drive oil prices higher. WTI closed 4.4 percent higher at $105.83 a barrel, Brent at $108.75. The development made the energy sector the only major industry to gain 2.3 percent. "This probably won't be a one-time thing, but a series of rate hikes," said Paul Nolte, market strategist at asset manager Murphy & Sylvest, referring to the Fed. "It's going to depend on oil. That's really the source of inflation, and it's starting to trickle down to other parts of the market."

Among individual stocks, technology and crypto stocks were under pressure. Concerns about the high energy requirements of data centers for artificial intelligence (AI) weighed on sentiment. The semiconductor index barely recovered from its slide on Monday and closed up just 0.4 percent.

A setback in the US Senate for a planned law to regulate cryptocurrencies pushed shares of Coinbase and Microstrategy down ten and 5.4 percent respectively. In contrast, Waystar's shares rose by 7.1 percent. According to a report by Reuters news agency, the healthcare software company is exploring strategic options, including a possible sale.