S&P 500 futures are little changed in early volatile trading as oil prices slide further below $100

Stock futures were stable as oil prices continued to drop further below $100, boosting hopes energy prices won’t drag the U.S. economy into a recession.

Futures were held back in volatile trading as traders continued to eye the latest with ceasefire negotiations in Ukraine and China Covid lockdowns that could wreak havoc on tech supply chains. Investors were also reluctant to commit capital ahead of a big Federal Reserve monetary decision Wednesday, where the central bank is expected to hike rates for the first time since 2018.

Dow Jones Industrial Average futures traded marginally higher. S&P 500 and Nasdaq 100 futures gained 0.1% and 0.3%, respectively. Earlier in the session, futures were down slightly.

Oil prices continued to fall for a second day. U.S. crude futures slid about 8% to $94.55 per barrel, after topping $130 about a week ago. Meanwhile, the international Brent benchmark was down than 7% to $98.46 per barrel.

The drop in oil prices put pressure on energy stocks. Occidental Petroleum fell more than 5%, while Schlumberger and Halliburton each lost more than 4%.

Airline stocks got a boost in the premarket. Delta Air Lines rose about 4.5%, while United and American gained more than 3%.

The city of Kyiv, Ukraine’s capital, announced a 35-hour curfew that starts at 8 p.m. local time following Russian missile strikes. Russia and Ukraine were also set to continue talks Tuesday, following a fourth round of negotiations Monday. Meanwhile, Russia is approaching a series of deadlines to make payments on its debt.

Elsewhere, officials from the United States and China met on Monday to discuss a range of challenges facing their bilateral relationship, including Russia’s ongoing war in Ukraine.

“The market is jittery,” said Gene Goldman, chief investment officer at Cetera Investment Management. “So much concern about the Russian invasion, inflation, and the Fed. With growing concerns of a bear market, investors have been skittish.”

Still, he said he doesn’t feel a bear market is in the cards, saying, “a pullback/correction becomes a bear market if a recession is likely. Fundamental data (labor, construction spending, PMIs, etc.) all support a solid economic base.”

However, China is facing its worst Covid outbreak since the height of the pandemic, raising concern over the global economic recovery going forward.

Fed meeting kicking off

The Federal Reserve is slated to kick off an important two-day meeting Tuesday, with investors expecting a quarter-point rate hike to be announced Wednesday.

Mounting inflationary concerns will weigh on the Fed meeting. A lockdown in China could worsen supply chain issues, after a surge in coronavirus cases suspended production in cities such as Shenzhen, a key manufacturing city. The Russia-Ukraine conflict had already led to a spike in commodities prices.

“With both of these factors driving prices higher, the government has no choice but to increase rates to absorb the inflation that is accelerating,” said Benjamin Tsai, president and managing partner at Wave Financial Group.

There also will be adjustments to the economic outlook, projections for the future path of rates and likely a discussion about when the Fed can start reducing its bond portfolio holdings.