Factories cool. Oil doesn’t.

The factory report just landed, and it gave the Fed a difficult mix. New York's Empire State activity index fell to 7.6 from 20.6 in August. New orders barely rose, shipments slipped, and the prices-paid index climbed to 63.1. Growth slowed while cost pressure intensified.

Monday's S&P 500 lost 0.5%, the Nasdaq slipped 0.6% and the 10-year Treasury yield briefly touched 5%. Yet the selloff was not universal. More S&P stocks rose than fell as health care, staples and communication shares offset some AI weakness.

Oil stayed above $100 and the 10-year Treasury yield moved around 5% as stocks headed toward the opening bell. The question now is whether investors keep rotating out of expensive AI names or start selling the rest of the market too.

September's Empire State survey shows why the Fed's decision is awkward. Factory activity still grew, but the index dropped thirteen points to 7.6. Orders edged up, shipments fell, and manufacturers reported faster input-price increases. The prices-paid index reached 63.1, above its already elevated August level.

The oil shock adds another layer. Saudi Arabia's East-West pipeline is largely offline after an attack. Two regional officials told AP repairs could take three to five weeks, while threats to Red Sea routes complicate exports. Brent closed Monday at $105.68 and traded near $107 before Tuesday's open. Higher fuel costs can move into freight, food distribution and inflation expectations.

Markets favor a quarter-point hike Wednesday, but Chair Kevin Warsh has not preannounced the outcome. The new rate projections and his 2:30 PM ET explanation may matter more to stocks than the hike itself. Investors need to know whether this is one inflation-insurance move or the start of a longer tightening cycle.

Watch the 10-year yield and Brent together. A persistent rise in both is a tougher setup for housing, discretionary spending and long-duration growth than either move alone.

The S&P closed Monday at 7,619.98, the Dow at 52,421.20 and the Nasdaq at 26,186.41. Nvidia fell 3.36% to $210.96, while Coinbase rose 9.24% to $191.45. Both stock moves are calculated from Massive's adjusted daily closes.

The useful distinction: cap-weighted indexes and most sector ETFs were red, but individual winners outside AI kept the decline from spreading evenly. If that breadth disappears today, the tone changes.

U.S. index futures recovered from deeper overnight losses as the opening bell approached, while oil and Treasury yields stayed elevated. The more important price action may come after traders digest the factory report's weaker activity and hotter input costs.

Rate futures and prediction markets both favor a quarter-point hike. The movement in those odds after today's factory data, and especially after Wednesday's Fed projections, matters more than one static probability.

The options lens: if the market expects the hike, a surprise hold or a steeper projected path may move rates and growth stocks more than the expected quarter point. Watch the bond reaction before reading too much into the first stock-index move.

AI stocks fell Monday after leaders called for a slower, safer development pace. A possible delay in OpenAI's IPO added another reason to revisit valuations built on distant growth. Nvidia closed 3.36% lower; technology's XLK ETF lost 1.81%.

Tuesday's Asia session was less one-sided. SoftBank regained about 7.5% in Tokyo after its earlier drop, even as European indexes weakened. That rebound is useful, but it does not settle how much future AI spending investors should pay for today.

The split to watch is signed infrastructure demand versus projections that require years of perfect execution. In a higher-rate market, the first can be valued on contracts and cash flow. The second is more vulnerable to a change in assumptions.

Dave & Buster's reported $544.1 million in fiscal Q2 revenue, down 2.4% from a year earlier. Comparable sales fell 2.9%. Its GAAP loss was $0.36 per share, while the adjusted loss was $0.27. The expected adjusted figure had been a small profit, so the miss is more than a technical accounting detail.

The important question is traffic. Pricing and promotion can support short-term revenue, but negative comparable sales alongside higher borrowing costs are a warning for experience-led discretionary businesses. PLAY rose 4.05% Monday before the report, then fell sharply in early Tuesday trading.

TONIGHT, TCOM: Trip.com reports after the close. Look for outbound China travel and international booking trends, not just headline earnings.

WEDNESDAY, LEN: Lennar reports after the Fed decision. Incentives, cancellations and gross margin will show how near-7% mortgages are affecting housing demand.

IREN: JPMorgan moved from Underweight to Overweight and set a $65 target. Against Monday's $43.17 close, that target is roughly 51% higher. The bullish argument depends on neocloud contracts and customer funding, while the stock itself fell 1.51% Monday as AI infrastructure came under pressure.

MARA: The same bank moved from Overweight to Underweight with an $11 target. One broker's opposite calls on IREN and MARA show that investors are separating AI hosting economics from the broader bitcoin-miner basket.

COIN: Compass Point raised its rating from Sell to Neutral with a $177 target. Coinbase closed at $191.45 after a 9.24% rise Monday. A neutral rating is not a bullish target: the stated target is about 8% below that close.