US stock opened lower on Wednesday after hotter-than-expected inflation data and rising oil prices dampened investor sentiment ahead of the Federal Reserve’s policy decision.
Dow Jones Industrial Average fell about 169 points, or 0.36%, while S&P 500 fell 0.31% and Nasdaq 100 declined roughly 0.26%.
The cautious tone followed a stronger-than-expected reading on wholesale inflation, which raised concerns that interest rates could remain higher for longer.
Inflation surprise dims rate cut expectations
Data from the Labor Department showed the Producer Price Index (PPI) rose 0.7% in February, well above expectations of a 0.3% increase.
On an annual basis, producer prices climbed 3.4%, exceeding forecasts of 2.9%.
The report reinforced concerns that inflation pressures are persisting, particularly as geopolitical tensions drive up energy and shipping costs.
Market expectations for monetary easing have shifted notably.
Traders now see the Federal Reserve cutting rates by at least 25 basis points only by April 2027, compared with expectations for a move as early as December 2026 before the data release.
Oil prices and geopolitical tensions add pressure
Oil prices continued to climb, adding to inflation concerns and market volatility.
West Texas Intermediate crude rose more than 2% to around $97.68 per barrel, while Brent crude advanced more than 4% to $108.3 per barrel.
Prices moved higher after reports of attacks on Iranian energy facilities and ongoing disruptions linked to the Strait of Hormuz.
Earlier in the session, crude had eased following the resumption of exports from Iraq’s Kirkuk fields, but gains resumed as geopolitical risks intensified.
The Middle East conflict has heightened fears of supply disruptions, contributing to broader concerns about stagflation and complicating the outlook for central banks.
President Donald Trump’s recent comments that the United States does not need NATO assistance to secure shipping routes have also added to uncertainty around global energy flows.
Fed decision and corporate movers in focus
Investors are now focused on the Federal Reserve’s policy decision, with markets widely expecting the central bank to keep rates unchanged. A
ttention will center on Chair Jerome Powell’s remarks for clues on how policymakers are assessing inflation risks tied to higher energy prices and geopolitical uncertainty.
Equity markets have shown resilience in recent sessions, supported by gains in technology stocks and strong corporate fundamentals.
Among individual stocks, Micron Technology rose 0.29% ahead of its earnings release, while SanDisk gained 1.6%.
Drone software company Swarmer extended its rally, rising 40% a day after its Nasdaq debut.
On the downside, travel stocks such as Delta, American Airlines and Carnival slipped, while Lululemon gained 2% even after issuing weaker-than-expected guidance.
Macy’s rose 5.6% after signaling that tariff-related pressures could ease later in the year.
With volatility elevated and key policy signals pending, markets remain cautious as investors navigate a complex mix of inflation risks, geopolitical tensions and shifting rate expectations.
