US Stock Market: S&P 500 Index Halts Two-Day Winning Streak as Inflation Concerns and Geopolitical Uncertainty Heat Up

U.S. stocks declined on Wednesday after the Federal Reserve kept interest rates unchanged and pointed to uncertainties in the economic outlook due to the Iran conflict.

The S&P 500 fell 1.4%, marking the worst decision day performance since December 2024.

Consumer staples stocks led the decline, with Amazon dropping 2.5%.

The tech-heavy Nasdaq 100 index declined 1.4%. The VIX, which measures market volatility, hovered around 25.

Near the close, Qatar announced that its largest liquefied natural gas export facility had suffered “serious damage.”

Federal Reserve Chair Jerome Powell said after the decision that rising energy prices would temporarily boost inflation, but “the development of the Middle East situation remains uncertain for the U.S. economy.”

He noted that to resume rate cuts, officials need to see a decline in inflation driven by tariffs.

Powell also said for the first time that he plans to stay at the Fed until the U.S. Department of Justice investigation is complete.

“Central banks typically ignore short-term oil price fluctuations because while such volatility can push up prices of certain goods and services, it often also suppresses economic activity, thereby easing inflation,” said Lindsay James, an investment strategist at Quilter.

Earlier Wednesday, data showed that U.S. wholesale inflation in February unexpectedly accelerated month-over-month, reflecting rising costs for goods and services.

In response to rising energy prices, President Donald Trump temporarily exempted a century-old shipping regulation.

Saudi Arabia resumed over 50% of its oil exports after bypassing the Strait of Hormuz. Unless the war ceases, this critical trade route is unlikely to return to normal.

At the close, the major indices were as follows:

• S&P 500 down 1.4% at 6,624.7 points;
• Dow Jones Industrial Average down 1.6% at 46,225.15 points;
• Nasdaq Composite down 1.5% at 22,152.42 points;
• Nasdaq 100 down 1.4% at 24,425.09 points;
• Russell 2000 down 1.6% at 2,478.642 points.