Here is Schwab's early look at the markets for Tuesday, September 15.

The Federal Reserve begins its two-day meeting today with investors widely expecting a rate hike tomorrow afternoon. This comes as inflation remained above the Fed's 2% target for several years and failed to improve monthly in August.

The last hike was in mid-2023, followed by a series of cuts that took rates from above 5% to the current 3.5% to 3.75%.

Failure to hike now—after the August core monthly Consumer Price Index (CPI) rose a higher-than-expected 0.3% excluding food and energy--would potentially mean even higher yields. Fed Chairman Kevin Warsh sounded hawkish in his Jackson Hole speech last month, and with CPI and employment both remaining relatively high, he might risk market credibility if he doesn't follow up words with action.

Meanwhile, Schwab experts now expect at least one Fed rate hike this year, with the first likely this week.

As of late Monday, odds of a 25-basis point hike were above 92%, up from 59% a week ago, according to the CME FedWatch Tool.

Tomorrow may be the last chance to hike at a regularly scheduled meeting until December. Next month's meeting precedes November's mid-term elections, making a rate hike then more politically difficult.

Besides rates, some numbers to watch tomorrow include the Fed's inflation expectations, which it raised sharply back in June to 4.4% and 3.3%, respectively, for headline and core Personal Consumption Expenditures (PCE) price growth this year. The previous ones were 3.6% and 2.7%, respectively.

Focus could turn to the Fed's 2027 PCE projections, which were 2.3% for headline and 2.5% for core in the June report. Any rise would likely have futures traders consider a "higher for longer" rate picture that might unsettle the market.

Though inflation hasn't reached the Fed's goal, it could be argued that core CPI has been steadily declining on an annual basis, reaching 2.4% last month. That was the lowest in five years and one possible argument against a rate hike.

Monday was pick your poison on Wall Street thanks to the combined blow of rising crude prices and comments from AI industry leaders about needing to slow the technology. This came after industry insiders warned of possible dire consequences from unchecked AI. OpenAI's leader said the firm is likely to postpone a planned public offering until next year.

That said, Anthropic appears to be moving ahead with its initial public offering (IPO), selecting Nasdaq as the exchange. Also, Nvidia hasn't apparently seen a need to slow down. It's in talks to invest in Anthropic's IPO, Reuters reported Monday.

AI was the main tailwind for tech and the broader economy over the last four years. If it slows, effects could reverberate beyond the big AI stocks, hitting firms involved in the data center buildout. This could mean miners extracting copper, construction companies building data centers, and energy firms providing power to run the data centers.

It also brings up a more near-term question as to which sectors might take the baton if tech gives it back. Recently, there'd been sector rotation into energy and away from recent leaders like healthcare and financials. Even so, the latter two had been ascendant for some time. With market breadth dwindling, there's not necessarily a lot to fall back on.

Away from tech, oil prices spiked Monday thanks to intensified fighting in the Gulf, attacks that will shut a major Saudi pipeline for weeks, and postponed talks between Iran and the Gulf States.

As oil climbed, the 10-year Treasury note yield traded north of 5% on Monday for the first time since late 2023. Monday's intraday high above 5.01% was a level last seen in 2007. Rising yields make it more costly for consumers and businesses to borrow money.

However, yields backtracked after President Trump posted that Russia and the Ukraine are open to stopping strikes against each other's infrastructure and Iran wants a deal. There were no immediate responses from the other countries.

The Bank of Japan meets later this week and analysts expect a hike. Rising rates there can be bearish for U.S. assets, sparking concern of the "yen carry" trade breaking down and investors shifting from U.S. to Japanese assets due to rising Japanese yields.

Data is light this week besides tomorrow's U.S. August retail sales. Analysts expect a solid 0.9% monthly increase, Briefing.com said, but that follows a sharp 0.6% drop in July, making for an easy comparison.

Control group retail sales excluding gasoline and some other items might be the number to watch tomorrow. It feeds into gross domestic product (GDP) and fell 0.4% in July.

Another key report later tomorrow is the monthly Treasury International Capital release, showing how much foreign investors and governments invested in or sold U.S. assets

Friday is "triple witching day" when options expire for various traded products. This could fuel volatility later this week as funds shift positions.

On Monday, major indexes fell for the fifth time in the last six sessions, though that partially reflected weakness in the heavily capitalized tech sector. More S&P 500 stocks were green than red, a welcome hint of improving breadth after breadth—a measure of market health beyond just the mega-caps--slid dramatically the last two weeks.

Still, just three of 11 S&P 500 sectors gained Monday, led by communication services and health care. Consumer staples also climbed more than 1% as defensive stocks climbed. Info tech fell more than 1.6% amid the AI stumble. Industrials also fell sharply on AI slowdown fears.

Technically, the key support level of 7,600 near the 50-day moving average for the S&P 500 Index held on another early test Monday.

Checking individual movers Monday, AI infrastructure and chip stocks fell sharply on concerns about a possible industry-led slowdown of development. Stocks hit hardest included Intel, Marvell Technology, Advanced Micro Devices, Corning, SK Hynix, Lumentum, and Arm Holdings.

Mega-caps outside of chips held their own, notably Alphabet rising more than 3% and Meta Platforms up almost 3%. Microsoft rose almost 2%. One school of thought suggests these firms might benefit from an AI slowdown that ramps back their spending.

Bank of America fell 5% after saying investment banking fees are set to fall 10% from a year ago this quarter, Barron's reported. The bad news from Bank of America hurt shares of other investment banks like Citigroup, Goldman Sachs, and JPMorgan Chase, as well.

GE Vernova, which had been riding high on the AI data center buildout, fell 8.6%.

The Cboe Volatility Index, or VIX, rallied nearly 8% to 17.10 by late Monday as participants hedged against possible equity market risk.

Oracle fell 3.6% after the company said its restructuring costs will be an additional $700 million.

Hewlett Packard Enterprise fell almost 11% after getting downgraded from Evercore ISI. Dell and Super Micro Computer, also in the AI equipment space, also lost ground.

Stocks focused on cybersecurity climbed. These included CrowdStrike and Palo Alto Networks. Crowdstrike rose almost 14%.

Software stocks, which fell earlier this year on fears of AI competition, performed well Monday. Gainers included ServiceNow, Adobe, Palantir, and Salesforce.

Crypto-related stocks including Coinbase, Circle Internet Group, and Strategy rose. The Senate is set to hold a key procedural vote today on the Clarity Act, which would establish a new regulatory framework for cryptocurrencies and other digital assets.

The Dow Jones Industrial Average® ($DJI) lost 152.09 points (-0.29%) Monday to close at 52,421.20; the S&P 500 Index ($SPX) fell 37.00 points (-0.48%) to 7,619.98, and the Nasdaq Composite® ($COMP) gave back 146.62 points (-0.56%) to 26,186.41.