U.S. stock futures slipped Tuesday morning. The move gave back only a sliver of Monday’s gains.

Contracts on the S&P 500 fell 0.22% to 7,816.50 shortly after 4 a.m. ET. Dow futures dropped 0.27% to 52,331.00, and Nasdaq-100 futures slid 0.24% to 30,711.50, according to Yahoo Finance data. Russell 2000 futures were off 0.36%, while the VIX held near 14.85, still a low, complacent reading by historical standards.

The pullback follows one of the strongest sessions of the year. The S&P 500 closed up 1.49% at 7,764.70 on Monday, the Dow gained 0.71%, and the Nasdaq Composite jumped 2.26% to a fresh record high.

Meta was the session’s biggest mover. The stock rocketed more than 11% after Wells Fargo analyst Ken Gawrelski raised his price target from $640 to $796, citing the strength of the company’s Muse AI family of models — a turnaround that has reshaped how investors view the Magnificent Seven this year. The rally got an extra push when Meta’s new Muse AI agent app hit the top spot on Apple’s App Store, a signal Wall Street read as proof that consumer demand for AI assistants — and the chip capacity behind them — is still accelerating. Meta reports at its Connect conference on Wednesday, where CEO Mark Zuckerberg is expected to lay out the company’s AI and wearables roadmap.

The AI trade carried into Asia overnight, extending Monday’s premarket chip rally into a second day. South Korean tech stocks jumped nearly 2% and Taiwan shares rose 1.3%, according to Reuters, while Japan’s market stayed closed for a holiday. MSCI’s broadest index of Asia-Pacific shares outside Japan rose more than 1% in early trading. Oil prices helped the mood: crude has held below $100 a barrel as improved tanker flows through the Strait of Hormuz eased fears of a supply shock, even as the November contract ticked up slightly overnight to $92.84.

italicThe Fed is the other force investors are pricing in.italic The Federal Reserve raised its benchmark rate a quarter point to 3.75%-4.00% on September 16, its first hike in more than three years, with all 12 voting members in favor. Chair Kevin Warsh, whose warnings at Jackson Hole foreshadowed the move, has kept a hawkish tone since, and the CME FedWatch tool now shows better-than-even odds of a second quarter-point hike at the October 28 meeting. That repricing has kept the dollar firm and is part of why gold has slipped back near $4,340 an ounce.

Geopolitics adds a second layer to the week. Treasury Secretary Scott Bessent called this week’s preliminary US-China staff talks in New York “very successful,” lifting hopes for at least a partial extension of the fragile trade truce ahead of Thursday’s formal meeting between President Trump and Chinese President Xi Jinping in Washington. For the fuller picture on how the Fed’s hawkish pivot and the summit’s stakes were shaping sentiment into the week, see Monday’s full preview.

  • What to Watch for the Open
  • S&P 500, Dow and Nasdaq-100 futures all down modestly (-0.2% to -0.3%) after Monday’s rally.
  • KB Home and AutoZone report earnings Tuesday, in an otherwise light week for U.S. economic data.
  • Trump-Xi summit in Washington on Thursday: trade, tariffs, AI exports and Taiwan all on the table.
  • Crude oil near $93 a barrel; gold down about 1% to $4,340 as the dollar strengthens.
  • CME FedWatch odds now favor another quarter-point Fed hike on October 28.

None of Monday’s catalysts have reversed by the opening bell. The question for Tuesday’s session is whether the AI trade can keep absorbing a Fed that has already started hiking again.