Wall Street fell sharply on Wednesday, following unfavorable news. The geopolitical conflicts between the U.S.-Israel force and Iran intensified resulting in a continued surge in crude oil prices. A key economic data showed that the inflation rate remained elevated even before the start of the Middle East war. The Fed FOMC meeting indicated only one rate cut this year. All three major stock indexes ended in negative territory.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) lost 1.6% or 768.11 points to close at 46,225.15. This marked the lowest close of the blue-chip index for 2026. The index also closed below its 200-day moving average. Notably, 28 components of the 30-stock index ended in negative territory while just two ended in positive territory.
The tech-heavy Nasdaq Composite finished at 22,152.42, sliding 1.5% or 327.11 points due to the weak performance by corporate bigwigs. At the intraday low, the tech-laden index was down more than 478 points.
The major loser of the index was Strategy Inc. MSTR. The stock price of the Bitcoin treasury company tumbled 6.5%. Strategy currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The S&P 500 fell 1.4% to finish at 6,624.70, reflecting its lowest close in 2026. Eight out of 11 sectors of the broad-market index ended in negative territory, while three ended in positive territory. The Energy Select Sector SPDR (XLE) rose 1.1% while the Health Care Select Sector SPDR (XLV) fell 0.9%.
The fear gauge CBOE Volatility Index (VIX) was up 12.2% to 25.09. A total of 19.4 billion shares were traded on Wednesday, lower than the last 20-session average of 19.8 billion. The S&P 500 recorded 17 new 52-week highs and 15 new 52-week lows. The Nasdaq posted 42 new 52-week highs and 218 new 52-week lows.
Crude Oil Prices Extend Gains
The Middle East war intensified showing no signs of peacemaking. Israel bombed a natural gas processing facility in Iran. In retaliation, the Iranian missile attack damaged a key liquefied natural gas export facility in Qatar. Iran has warned of attacking more energy facilities in Qatar, Saudi Arabia and the United Arab Emirates.
As a result, the U.S. benchmark West Texas Intermediate (WTI) futures rose 0.4% to settle at $96.32 per barrel. The global benchmark — the Brent futures — settled up 3.8% to $107.38 per barrel.
Fed’s FOMC Meeting
The Fed kept the Fed fund rate steady in the range of 3.5-3.75% with an overwhelming voting majority of 11-1. In his post-FOMC meeting statement, Fed Chairman Jerome Powell said that the “implications of developments in the Middle East for the U.S. economy are uncertain. The forecast is that we will be making progress on inflation, not as much as we had hoped, but some progress on inflation.”
The central bank’s latest dot-plot shows only one interest rate cut of 25 basis points in 2026. The Fed raised its headline PCE inflation forecast to 2.7% in 2026 from 2.4% projected in December. Similarly, the core PCE Inflation (excluding the volatile food and energy items) projection increased to 2.7% from 2.5% in December. However, the GDP growth rate forecast edged-up to 2.4% in 2026 from 2.3% projected in December.
Economic Data
The Department of Labor reported that the producer price index (PPI) rose 0.7% in February, higher than the Zacks Consensus Estimate of 0.4%. The metric for January was 0.5%. The core PPI (excluding volatile food and energy items) rose 0.3% in February, in line with the Zacks Consensus Estimate. The metric for January was 0.7%.
Year over year, the headline PPI and core PPI increased 3.4% and 3.9%, respectively, in February. Both measures were significantly above the Fed’s 2% target. The primary reason for this hot inflation data was the imposition of the “Liberation Day tariffs” on U.S. imports by President Donald Trump.
New orders for manufactured goods (both durable and non-durable) increased 0.1% in January, missing the Zacks Consensus Estimate of 0.3%. The metric for December was revised downward to a decline of 0.4% from a decline of 0.7% reported earlier. In January, new orders for manufactured durable goods remained almost unchanged while new orders for manufactured non-durable goods rose 0.3%.
For the week ending March 13, U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 6.2 million barrels from the previous week.
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This article originally published on Zacks Investment Research (zacks.com).
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