The climb in energy costs has triggered a defensive shift in bond markets, where investors are recalibrating their expectations for Federal Reserve policy. Traders have increased the probability of an interest rate hike at next week’s meeting to nearly 25%, up from 16% just days ago. With gas prices now exceeding $4 per gallon, the inflationary pressure is complicating the economic outlook for policymakers.

Market movement remains measured as investors await a wave of corporate disclosures. While the Nasdaq composite retreated slightly following a recent surge in semiconductor stocks, the Dow industrials maintained a modest upward trend. Attention now shifts to the close of trading, with Alphabet, Tesla, and IBM scheduled to release their latest earnings reports.