U.S. Equities: S&P 500 Halts Two-Day Rally as Inflation Worries and Geopolitical Risks Intensify

Deep News
03/19

U.S. stocks declined on Wednesday after the Federal Reserve held interest rates steady, noting that the conflict in Iran introduces uncertainty into the economic outlook. The S&P 500 fell 1.4%, marking its worst single-day performance following a policy decision since December 2024. Consumer staples led the decline, with Amazon among the top losers, dropping 2.5%. The tech-heavy Nasdaq 100 Index also fell 1.4%, while the CBOE Volatility Index (VIX) hovered near 25. Near the close, Qatar reported "significant damage" at the site of the world's largest liquefied natural gas export facility. Following the announcement, Fed Chair Jerome Powell stated that rising energy prices would likely push inflation higher in the short term, but noted that "the implications of Middle East developments for the U.S. economy remain unclear." He emphasized that for officials to resume interest rate cuts, they would need to see a moderation in goods inflation previously driven by tariffs. Powell also indicated for the first time that he intends to remain at the central bank until after the conclusion of a U.S. Department of Justice investigation. "Central banks typically look past short-term oil price swings because, while they boost prices for some goods and services, they also tend to dampen economic activity, thereby muting inflationary effects," said Quilter investment strategist Lindsay James. Earlier on Wednesday, data showed that U.S. wholesale inflation unexpectedly accelerated on a monthly basis in February, reflecting increased costs for goods and services. In response to rising energy prices, U.S. President Donald Trump temporarily waived a century-old shipping regulation. Saudi Arabia has restored more than half of its crude exports after rerouting shipments away from the Strait of Hormuz. Unless a ceasefire is reached, this key trade passage is unlikely to reopen. At market close, the S&P 500 was down 1.4% at 6,624.7 points; the Dow Jones Industrial Average fell 1.6% to 46,225.15 points; the Nasdaq Composite dropped 1.5% to 22,152.42 points; the Nasdaq 100 Index declined 1.4% to 24,425.09 points; and the Russell 2000 Index decreased 1.6% to 2,478.642 points.

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