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Stocks edged lower on Wednesday after a higher-than-expected producer price index reading, even as investors awaited the Federal Reserve’s rate decision later in the day.
The Dow Jones Industrial Average fell 0.5%. The S&P 500 and the Nasdaq Composite each declined 0.4%.
The weakness followed February’s wholesale inflation data, which came in above expectations. The producer price index rose 0.7% month-on-month, up from January’s 0.5% increase and higher than the 0.3% estimate in a Dow Jones poll. The data pointed to continued inflation pressure, even before the Iran conflict added to concerns around rising oil prices.
Adding to these concerns, Iran’s Islamic Revolutionary Guard Corps (IRGC) has issued evacuation warnings for multiple energy facilities across Saudi Arabia, Qatar and the UAE following Israeli strikes on southern Iran’s energy infrastructure, signalling a further escalation in risks to regional supply.
Markets are now focused on the Fed’s policy outcome and comments from Chair Jerome Powell, particularly for any signals on inflation and the impact of higher crude prices. Investors will also track the Summary of Economic Projections for guidance on inflation, growth and the labour market. Rates are widely expected to remain unchanged in the 3.5% to 3.75% range.
Also read: Iran war, oil and sticky inflation: Factors that may put Fed’s rate cut plans on hold
Oil prices pushed higher at 19:15 IST, with WTI crude at $97.70, up $1.49 (+1.55%), while Brent crude climbed to $107.6, gaining $4.22 (+4.08%). Murban crude rose to $112.8, up $1.82 (+1.64%), and natural gas edged up to $3.066, adding $0.033 (+1.09%).
The move comes after equities closed higher on Tuesday despite a rise in oil prices. Crude had gained after Donald Trump said in a Truth Social post that the US did not need support from NATO allies in the Middle East. Not to forget, Trump sought backing from NATO allies to seize the Strait of Hormuz, which was not supported by member nations.
