The S&P 500 Index closed down 1.36% on Wednesday, marking a significant market decline alongside the Dow Jones Industrial Average, which fell 1.63%, and the Nasdaq 100 Index, down 1.43%. This drop comes after unexpected increases in U.S. February producer prices, revealing persistent inflationary pressures, and as geopolitical tensions escalated with Iran threatening energy infrastructure in Saudi Arabia, Qatar, and the UAE in response to U.S. and Israeli actions.
In economic data, the February Producer Price Index (PPI) rose by 0.7% month-over-month and 3.4% year-over-year, exceeding forecasts of 0.3% and 3.0%, respectively. Meanwhile, U.S. mortgage applications declined by 10.9% for the week ending March 13, coinciding with a rise in the average 30-year fixed-rate mortgage to 6.30%. The Federal Open Market Committee (FOMC) voted 11-1 to maintain the fed funds target rate at 3.50%-3.75%, while adjusting their 2026 GDP forecast upward to 2.4%.
Crude oil prices remain volatile, with disruptions to 7.5% of global supply due to the ongoing conflict with Iran, which has targeted about 20 vessels in the Strait of Hormuz. Goldman Sachs has warned that prices could reach historic highs exceeding $150 per barrel if tensions persist, given that this strait handles a fifth of the world’s oil supply.
