The major averages finished lower for the second consecutive session on Tuesday as another surge in crude oil, elevated Treasury yields, and caution ahead of tomorrow's FOMC decision kept buying interest subdued. The S&P 500 (-0.5%), Nasdaq Composite (-0.8%), and DJIA (-0.6%) all ended in negative territory following a relatively quiet afternoon.

Oil prices were again a major influence on the session. WTI crude settled $4.59 higher (+4.5%) at $105.82 per barrel, marking its tenth gain in the past 11 sessions and leaving oil nearly $20 per barrel higher in September as the conflict with Iran continues. The latest advance pushed crude to its highest level since late May and helped the energy sector (+2.3%) finish comfortably atop the sector standings.

Higher interest rates presented another obstacle for equities. The 10-year note yield rose four basis points to 5.00%, keeping pressure on rate-sensitive areas of the market. The utilities sector (-1.2%) was among the more pronounced laggards after also retreating yesterday, as elevated Treasury yields increased the relative appeal of fixed-income alternatives.

The consumer discretionary sector (-1.8%) finished at the bottom of the standings amid continued concerns about inflation squeezing consumer-company profit margins. Homebuilders were also pressured by the elevated rate environment, while Chipotle Mexican Grill (CMG 34.83, -2.20, -5.94%) and Carvana (CVNA 66.89, -3.98, -5.62%) were among the group's notable individual laggards.

Technology stocks offered some relative support after yesterday's sharp semiconductor selloff, although the early rebound in chip stocks lost considerable momentum as the session progressed. The PHLX Semiconductor Index (+0.4%) finished modestly higher after gaining nearly 2.0% this morning, while the information technology sector (-0.3%) ended with a relatively modest loss.

Mega-cap weakness remained a drag elsewhere, contributing to the communication services sector's (-0.8%) decline. The financials sector (-0.3%) also faced pressure though it recovered from its worst levels, with weakness in crypto-related names intensifying during the afternoon after the U.S. Senate failed to advance the Clarity Act in its first procedural vote. Coinbase Global (COIN 172.11, -19.34, -10.10%) finished among the worst-performing S&P 500 components after already trading sharply lower earlier in the session as Bitcoin gave back yesterday's gain.

Aside from the energy sector, only the materials sector (+0.4%) managed to finish higher after spending part of the morning in negative territory.

Corporate headlines were otherwise relatively quiet and did little to alter the broader direction of the market. The lack of meaningful buying interest also came as investors prepared for Wednesday's FOMC decision. The CME FedWatch Tool assigns a 94.5% probability to a 25-basis-point rate hike. With crude oil above $105 per barrel and the 10-year yield back at 5.00%, the Fed decision takes on added significance as investors weigh persistent inflation pressures against an increasingly difficult backdrop for equities.

U.S. Treasuries found renewed pressure on Tuesday, causing longer tenors to give back their modest gains from the start of the week. The 2-year note yield settled up three basis points to 4.66%, and the 10-year note yield settled up four basis points to 5.0%. 

• Russell 2000: +15.7% YTD
• Nasdaq Composite: +11.8% YTD
• S&P 500: +10.8% YTD
• S&P Mid Cap 400: +10.8% YTD
• DJIA: +8.4% YTD

Reviewing today's data: 

• The Empire State Manufacturing Index fell to 7.6 in September (Briefing.com consensus 14.1) from 20.6 in August.