Wall Street stocks moved lower on Wednesday as markets largely looked past a tame inflation report, focusing instead on intensifying hostilities and mounting repercussions related to the U.S.-Israeli war on Iran.
Trade was choppy for much of the session as investors were caught in a tug-of-war between oil supply concerns. Iran continued to attack ships in the blockaded Strait of Hormuz but OPEC assured markets that Saudi Arabia had ramped up production and the International Energy Agency (IEA) agreed to release 400 million barrels of oil from its strategic reserves.
The Dow was down most among the three equity indexes, while chip manufacturers helped minimize the tech-laden Nasdaq’s decline.
The Labor Department’s Consumer Price Index (CPI) indicated that inflation remained moderate last month, matching analyst expectations.
Annual CPI growth is now within half a percentage point of the U.S. Federal Reserve’s 2% target. Still, markets shrugged off the report, as it predated the war on Iran, which has sent crude prices soaring and could stoke inflation.
Fears mounted after Iran’s military command said the world should prepare for crude prices to hit $200 per barrel, more than double their current level.
“The narrative has become focused on oil prices and what’s going to happen in the Strait of Hormuz, and the market seems to be ebbing and flowing with news about what is going to happen there,” said Chuck Carlson, chief executive officer at Horizon Investment Services in Hammond, Indiana. “The leverage seems to have shifted toward Iran and its control of the Strait, how is how’s the U.S. going to undo that and what will it mean for oil prices?”
The Fed is widely expected to let its key interest rate stand at its upcoming policy meeting, during which policymakers are likely to weigh the possibility of spiking prices against signs of a softening jobs market, a combination that raises concerns over potential stagflation.
“I think the word ‘transitory’ may come back,” Carlson added. “I think they’re probably more concerned about about jobs than they are about inflation right now, the the spike in oil notwithstanding.”
The Dow Jones Industrial Average fell 349.55 points, or 0.73%, to 47,357.79, the S&P 500 lost 19.34 points, or 0.29%, to 6,762.10 and the Nasdaq Composite lost 34.10 points, or 0.15%, to 22,662.71.
Among the 11 major sectors of the S&P 500, financials were down the most, while energy was the clear outperformer, benefiting from rising crude prices.
Front month WTI and Brent crude futures were both up more than 5%.
Tech was also marginally higher, with a boost from Oracle, which provided better-than-anticipated revenue guidance on expectations that the artificial intelligence-related spending boom will extend through 2027. Its shares jumped 8.5%.
JPMorgan Chase marked down the value of certain loans held by private-credit groups and is tightening its lending to the sector, a report said.
Ares Management slid 4.2% and Apollo Global fell 1.8%.
Campbell’s fell 5.9% after the packaged food company cut its annual forecasts and warned of increasing pressure in the second half from revised U.S. tariffs.
Defense company AeroVironment dropped 5.6% after forecasting 2026 adjusted profit below estimates.
Declining issues outnumbered advancers by a 2.21-to-1 ratio on the NYSE, where there were 54 new highs and 100 new lows.
On the Nasdaq, 1,732 stocks rose and 2,886 fell as declining issues outnumbered advancers by a 1.67-to-1 ratio.
The S&P 500 posted two new 52-week highs and 11 new lows. The Nasdaq Composite recorded 40 new highs and 98 new lows.