Dow Jones Futures Trade Cautiously Ahead Of Fed Policy, Hormuz Uncertainty Lingers On

United States (US) equity markets trade with caution at the start of the European trading session on Tuesday. As of writing, S&P 500 futures are down 0.16% to near 7,160, and Dow Jones futures are flat slightly below 49,200.

The US stock markets face slight caution ahead of the start of the two-day Federal Reserve (Fed) policy meeting later in the day. Investors expect the Fed to hold interest rates steady in the range of 3.50%-3.75% for the third meeting in a row and warn of upside inflation and downside economic risks in the wake of the Middle East crisis. This will be the last policy meeting of Fed Jerome Powell as the Chairman.

Investors will pay close attention to the monetary policy statement and Fed Powell’s press conference to get fresh cues on the US interest rate outlook. According to the CME FedWatch tool, there is a 73.4% chance that the Fed will keep interest rates at their current levels during the entire year, while the rest favor a rate cut.

Later in the day, investors will focus on the US Q12026 earnings of the Visa (V) and the Coca-Cola company (KO).

On the geopolitical front, the continuous closure of the Strait of Hormuz, a vital passage to almost 20% of global energy supply, remains a key concern for riskier assets, such as Dow Jones futures. Elevated oil prices in the wake of stalled peace talks between the United States (US) and Iran are raising concerns over corporate earnings projections globally.

As per the latest, US President Donald Trump has discussed Iran’s proposal with the national security team, which calls for the reopening of the Strait of Hormuz and a permanent ceasefire, according to comments from White House press secretary Karoline Leavitt. However, she didn’t reveal any information regarding the odds of whether it will be taken forward by Washington.