U.S. stock futures were little changed Tuesday night as investors turned their attention to the Federal Reserve’s latest policy decision, with markets expecting interest rates to remain unchanged while searching for clues about the direction of monetary policy under new Fed Chair Kevin Warsh.

Futures tied to the S&P 500 edged slightly higher, Nasdaq 100 futures gained 0.2%, while Dow Jones Industrial Average futures hovered near flat, reflecting a cautious mood after a mixed trading session that saw the Dow reach fresh record highs while technology shares came under pressure.

The Federal Open Market Committee meeting marks the first policy decision under Warsh’s leadership and comes at a pivotal moment for financial markets, with investors balancing easing geopolitical tensions in the Middle East, moderating energy prices, resilient economic growth, and expectations that artificial intelligence investment will continue driving corporate earnings.

Dow Breaks New Ground as Market Leadership Broadens

The Dow Jones Industrial Average continued its remarkable advance during Tuesday’s session, climbing 328.64 points, or 0.64%, to reach new intraday and closing records. The blue-chip index briefly crossed the 52,000-point threshold for the first time in history before ending the session just below that milestone.

While the Dow posted gains, technology-heavy benchmarks struggled. The S&P 500 declined 0.57%, while the Nasdaq Composite fell 1.15%, reflecting continued rotation away from some high-flying technology names into sectors that had lagged earlier in the year.

The divergence shows that investors are increasingly broadening their exposure beyond the handful of mega-cap technology companies that have dominated market returns since the artificial intelligence boom began.

Market strategists view this broadening as a healthy development rather than a warning sign. According to Scott Chronert, head of U.S. equity strategy at Citi Research, the changing market leadership could create a stronger foundation for future gains.

“I think we’re in pretty good shape here for a solid finish to the quarter, and then, as we go into the second half, color us constructive,” Chronert said during CNBC’s “Closing Bell: Overtime.”

His assessment underlines growing confidence among Wall Street strategists that the market’s rally is becoming more durable as gains spread across a wider range of sectors.

SpaceX Mania Continues

One of the market’s biggest stories remains the explosive debut of SpaceX. Shares of Elon Musk’s company climbed more than 4% during Tuesday’s session and continued rising in after-hours trading, gaining another 2%.

The stock is now up nearly 50% from its initial public offering price of $135 per share, underscoring investors’ appetite for companies positioned at the intersection of artificial intelligence, space technology, and advanced infrastructure. The surge has helped lift the company’s market capitalization well above $2 trillion, making it one of the most valuable publicly traded companies in the world just days after its listing.

The rally has also reignited debate about valuations across the AI sector. While bullish investors point to SpaceX’s dominance in satellite communications through Starlink, reusable rocket technology, and its integration with Musk’s AI venture xAI, skeptics continue to question whether current valuations adequately reflect the company’s profitability challenges and heavy capital spending requirements.

Regardless, the stock’s performance reflects the broader enthusiasm surrounding AI-related investments that continues to drive market sentiment.

Iran Deal Changes the Market Narrative

A significant factor supporting investor confidence has been the apparent easing of geopolitical risks in the Middle East. Markets responded positively after President Donald Trump announced that the United States and Iran had reached a potential agreement to end hostilities. Pakistani Prime Minister Shehbaz Sharif subsequently stated that military operations between the parties had ceased and that a formal signing ceremony is expected to take place in Switzerland on Friday.

The prospect of a diplomatic resolution has already started influencing energy markets. Oil prices, which surged earlier during the conflict amid fears of supply disruptions and potential closure of the Strait of Hormuz, have begun retreating as investors price in lower geopolitical risk.

Analysts expect the decline in energy prices to have far-reaching consequences for inflation expectations, monetary policy, and corporate profitability. Falling oil prices are also expected to reduce one of the key risks that had threatened to push inflation higher in recent months.

Chronert highlighted this dynamic when discussing the market outlook.

“With oil prices beginning to come off here as we get closer to an Iran conflict resolution, I think we can see the Fed moving to the sidelines,” he said.

AI Infrastructure Remains Wall Street’s Favorite Theme

While market leadership has broadened, analysts continue to view artificial intelligence as the most important structural growth theme for equities. Chronert said he still expects leadership from the AI infrastructure sector as companies begin reporting second-quarter earnings.

The AI infrastructure ecosystem includes semiconductor manufacturers, cloud computing providers, data center operators, networking firms, and power suppliers that support the rapid expansion of AI workloads. The theme has become one of the most powerful drivers of capital spending in modern technology history. Major technology companies are projected to spend hundreds of billions of dollars this year on AI-related infrastructure, helping support earnings growth across a wide range of industries.

“What this ultimately does is extend the broadening playbook, which has been underway for the past month or so, all of which gives us, in our view, a path higher as we go into the back half of the year,” Chronert said.

He is understood to be suggesting that Wall Street increasingly sees AI not as a short-term speculative trend but as a long-term investment cycle capable of sustaining earnings growth across multiple sectors.

All Eyes on Kevin Warsh and the Federal Reserve

Despite the optimism surrounding geopolitical developments and AI investment, the Federal Reserve remains the immediate focus for markets.

Wednesday’s meeting represents the first policy decision under Fed Chair Kevin Warsh, who assumed leadership at a time when the U.S. economy continues to demonstrate resilience despite higher borrowing costs. Investors overwhelmingly expect the central bank to leave interest rates unchanged within a target range of 3.5% to 3.75%.

The more important question is how policymakers characterize the economic outlook. Market participants will closely examine the Fed’s statement, updated economic projections, and Warsh’s comments for indications of whether policymakers remain concerned about inflation or are becoming more focused on supporting growth.

A notable wrinkle in this meeting is that many Fed watchers do not expect Warsh to submit his own interest-rate projection in the quarterly “dot plot,” potentially limiting insight into his personal policy preferences. That leaves investors relying heavily on his public remarks to understand how the new chair intends to guide monetary policy.

Beyond the Fed decision, investors will also digest several important economic reports on Wednesday. Retail sales data for May will provide fresh evidence on the strength of consumer spending, which remains the primary engine of U.S. economic growth. Pending home sales figures will offer insight into the health of the housing market, a sector that continues to grapple with elevated mortgage rates and affordability challenges.

Corporate earnings will also remain in focus.

Investors will hear from companies including CarMax and Jabil before the opening bell, providing additional clues about consumer demand and business investment trends.