The SOX chip index dropped nearly 2% Tuesday, following a midday selloff that saw losses exceed 8%. This downward pressure persisted into Wednesday, pushing Asian indexes lower and keeping U.S. futures in the red. Market participants are recalibrating expectations for Federal Reserve policy, as futures markets increasingly price in a rate hike by year-end.

Central bank activity remains a primary focal point globally. The European Central Bank is expected to announce a rate hike tomorrow, while Japanese wholesale price data has solidified bets that the Bank of Japan will initiate a similar move next week. Simultaneously, renewed missile exchanges between the U.S. and Iran have introduced fresh uncertainty into energy markets, complicating the outlook despite a recent dip in crude prices to a seven-week low. These geopolitical tensions, coupled with the anticipation surrounding the upcoming SpaceX IPO, continue to fuel volatility as investors shift capital positions.