A television station broadcasts the Federal Reserve’s decision to hold rates after a Federal Open Market Committee (FOMC) meeting on the floor of the New York Stock Exchange (NYSE) in New York, US, on Wednesday, March 18, 2026.
Michael Nagle | Bloomberg | Getty Images
Stocks sold off on Wednesday after new U.S. economic data as well as comments from the Federal Reserve chief stoked concerns about persistent inflation in the country.
The Dow Jones Industrial Average lost 604 points, or 1.3%. The S&P 500 fell 1%, as did the Nasdaq Composite.
The Fed kept its fed funds rate in a range between 3.5% to 3.75%, saying in its post-meeting statement 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,” Fed Chair Jerome Powell said during a press conference.
The central bank signaled that it still expects one cut this year, however.
Wholesale inflation heating up
The producer price index — which tracks the change in wholesale prices — rose 0.7% in February, well above the 0.3% that economists polled by Dow Jones had estimated. The report shows that inflation was already in a precarious spot prior to the Iran war breaking out — an event that has heightened stagflation fears amid rising oil prices.
“The hotter than expected number is specific to tariffs,” Todd Schoenberger, CIO at CrossCheck Management, said, noting that metals, industrial inputs and manufacturing costs are all seeing higher prices. “This is structural inflation, not temporary, and is likely going to impact monetary policy deep into the third quarter.”
“Add in the hotter energy prices we’ve seen since the Iran War began, which have yet to show in these reports, and Wall Street is bracing for rapidly rising prices that will clearly flow down to the consumer level,” Schoenberger continued.
International benchmark Brent crude futures rose 4% at $108 a barrel. U.S. oil prices were trading at elevated levels as well, with West Texas Intermediate futures up 1% at $97 per barrel.
The moves come after Israel reportedly struck Iran’s largest gas processing facility located in Bushehr Province. Iran has also threatened attacks on oil facilities in Saudi Arabia, the United Arab Emirates and Qatar. The country this week already launched a new wave of attacks on the UAE’s energy infrastructure, sparking fears about crude and fuel shipping.
“It’s very clear the market is pricing this conflict in as temporary,” said Tim Urbanowicz, Innovator Capital Management chief investment strategist, on CNBC’s “Power Lunch.” “We think that is our base case as well. But we also want to be careful, because the reality of it is, the longer oil prices stay at these elevated levels, the more of a chance we have where inflation becomes sticky.”