Dow Futures hovered near the flatline on Tuesday, following a rally in the previous session fuelled by renewed optimism regarding artificial intelligence after recent safety concerns. U.S. President Donald Trump is scheduled to address the United Nations General Assembly, with expectations for advancements in the pursuit of a diplomatic solution to Washington’s conflict with Iran. St. Louis Fed President Alberto Musalem informs Reuters that an additional interest rate increase might be required to address inflation, as Chinese technology leader Alibaba unveils a new AI chip.

Dow futures exhibited little movement on Tuesday, following the benchmark S&P 500’s most significant gain since August, driven by robust performance in AI-related stocks. By 03:09, the Dow futures contract had edged down by 25 points, or 0.1%, while S&P 500 and Nasdaq 100 futures remained largely stable. The primary indices on Wall Street experienced a rally in the previous session, largely driven by optimism surrounding a new AI model from Meta Platforms, the parent company of Facebook. This development has ignited expectations that agentic AI could soon be accessible to mainstream consumers. Shares of Meta experienced a significant increase, alongside those of companies such as Advanced Micro Devices and Intel, which produce the central processing units essential for AI agents. Expectations surrounding this week’s United Nations General Assembly to potentially alleviate tensions in the Middle East have contributed to a decline in oil prices, further extending last week’s losses and alleviating certain inflationary concerns. The benchmark 10-year U.S. Treasury yield, which moves inversely to prices, experienced a slight decline.

President Donald Trump is scheduled to address the UN summit in New York City, where global leaders will gather to deliberate on a range of pressing issues, including the conflicts in the Middle East and Ukraine, as well as the safety of artificial intelligence. U.S. Ambassador to the UN Mike Waltz stated that Trump will “highlight how he has and his administration have confronted complex problems head-on around the world,” and will “touch on” ensuring Iran never has a nuclear weapon. Trump’s war of choice with Iran, which has persisted since late February, poses a risk of escalating into a broader Middle East conflict that could significantly disrupt essential oil supplies. Recent hostilities have erupted in Yemen involving Iran-backed Houthi militants and Saudi-aligned forces, posing a risk to crude oil transportation through the Bab el-Mandeb Strait. This narrow passage has become increasingly vital for Riyadh to access global markets, especially in light of the operational challenges faced at the adjacent Strait of Hormuz. The U.S. has thus far rejected requests from Saudi Arabia to participate in its conflict against the Houthis, with analysts observing that American forces in the Gulf have become increasingly strained as they assist in transporting shipments through the Strait of Hormuz and safeguarding current military installations in the area. Trump has cautioned that Iran’s leadership may face elimination if it fails to pursue a deal to address the conflict, whereas Tehran has pledged to respond to any new aggression. Nonetheless, the president has expressed a willingness to engage in discussions with Iranian counterpart Masoud Pezeshkian during the upcoming UN summit, as reported by various media outlets. Despite the potential for a diplomatic breakthrough, Brent crude futures remain above $100 a barrel. The contract was last trading higher by 1.0% at $101.36 a barrel.

The Federal Reserve is expected to increase interest rates once more to curb inflationary pressures driven by energy, as indicated by St. Louis Fed President Alberto Musalem. Speaking on Monday, Musalem emphasised that it would be more advantageous for the Fed to take prompt action rather than delay. “[P]ersistent demand and recurring supply forces are continuing to contribute to keeping inflation risks elevated, and I judge that without further policy restraint on inflation it is more likely to be substantially above our 2% target in 18 months than at target,” Musalem said. However, Musalem, who is not a voting member of the rate-setting Federal Open Market Committee, did not specify how high he thinks the policy rate should be in order to combat inflation. Last week, the Fed decided to increase borrowing costs by 25 basis points, alleviating concerns in the markets regarding the central bank’s commitment to controlling inflationary pressures. New projections from policymakers, along with remarks from Fed Chair Kevin Warsh, suggest that an additional hike may be on the horizon before the year’s conclusion.

Alibaba Group introduced a new AI chip on Tuesday, claiming it to be the most powerful in China. The internet giant also revealed intentions for a significant expansion in data center capacity in the forthcoming years. Alibaba CEO Eddie Wu announced the new chip, the Zhenwu V900 accelerator, at the company’s annual Apsara Conference in Hangzhou on Tuesday. Wu stated that the V900 triples the performance of its predecessor and can be combined in clusters of up to 500,000 units to train frontier AI models. “(The Zhenwu V900) is the most powerful AI chip in China today, delivering three times the performance of its predecessor, the Zhenwu M890,” Wu said during his keynote address.

Paramount Skydance announced a settlement on Monday with California and 11 other states that had initiated a lawsuit aimed at obstructing its $110 billion acquisition of Warner Bros Discovery. The agreement paves the way for one of the most significant media mergers in history. The settlement mandates that Paramount enhance its domestic film production expenditure by a minimum of $300 million each year and incrementally elevate its film output following the conclusion of the agreement, as stated by California Attorney General Rob Bonta during a press conference. The company is set to produce 30 films in each of the initial two years following the completion of the deal, and 32 films in each of the subsequent three years, as stated by Bonta. Each year, a minimum of four films should be independent productions, while at least 20% of the total must qualify as blockbusters. Paramount will establish a news editorial independence board aimed at safeguarding editorial independence at CBS and CNN networks, as outlined in the settlement terms, Bonta stated.