Tuesday saw a slight decline in US stock index futures as investors became uneasy after Australia’s central bank’s unexpected interest rate increase before the Federal Reserve’s much-anticipated policy meeting.

According to economists surveyed by Reuters, the U.S. central bank will raise interest rates by 25 basis points on Wednesday and then leave them unchanged for the rest of 2023.

Worries about an economic downturn and stress in the banking industry have fanned expectations of rate reduction in the second half of the year. Rate cuts, however, are less likely due to inflation currently running well above the central bank’s 2% objective and a very robust labour market.

Denting sentiment, the Australian central bank increased its cash rate by 25 basis points when investors anticipated a long pause, blaming excessive inflation and announcing even higher rates.

After Treasury Secretary Janet Yellen warned that the government could run out of money within a month, insurance costs against a default in the United States increased significantly. As a result, President Joe Biden invited four top congressional leaders to the White House the following week.

“Nerves are rising about the debt ceiling standoff in the U.S., with the prospect that a default could shake the global economy,” said Susannah Streeter, head of money and markets at Hargreaves Lansdown. “Focus is now switching to how the U.S. government will be able to pay its bills amid gridlock in Washington.”

Although First Republic Bank’s (NYSE:FRC) weekend auction caused a rout in the regional banking sector and strong gains for JPMorgan Chase & Co. (NYSE:JPM), the largest U.S. bank picked up the beleaguered lender’s assets, U.S. stocks ended little changed on Monday.

All eyes will be on the employment and factor orders data later in the day since the manufacturing data from Monday supports the need for the Fed to continue tightening in the near future.

The day’s scheduled earnings from important corporations like Pfizer Inc (NYSE:PFE), Uber Technologies (NYSE:UBER), Cummins Inc (NYSE:CMI), and Marriott International (NASDAQ:MAR) Inc. continue to be a significant point of attention.

According to Refinitiv statistics, analysts anticipate that first-quarter earnings for S&P 500 businesses would decline 1.9% from a year earlier due to better-than-expected reporting from certain technology and growth giants, down from the 5.1% decline anticipated at the beginning of April.

At 5:33 a.m. ET, the S&P 500 was down 7 points, or 0.17%, the Nasdaq 100 was down 1 points, or 0.01%, and the Dow was down 72 points, or 0.21%.

Individual stock gains came from Tesla (NASDAQ:TSLA) Inc., which increased pricing in Canada, China, Japan, and the United States after slashing prices on its best-selling vehicles since the year’s beginning.

Chegg (NYSE:CHGG), a provider of educational services, fell 44.7% due to a dim revenue outlook for the second quarter and growing ChatGPT competition.