A trader works, as a screen broadcasts a news conference by U.S. Federal Reserve Chair Jerome Powell following the Fed rate announcement, on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., Dec. 10, 2025.
Brendan McDermid | Reuters
Stocks fell on Wednesday after a hotter-than-expected producer price index reading and as traders awaited the Federal Reserve’s rate policy decision.
The Dow Jones Industrial Average lost 401 points, or 0.9%. The S&P 500 fell 0.5%, as did the Nasdaq Composite.
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.
U.S. oil futures were higher on the day, with West Texas Intermediate futures up 3% at $99 per barrel. International benchmark Brent crude rose 5% at $109 a 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.
President Donald Trump waived the U.S. shipping law known as the Jones Act for 60 days in an effort to stabilize oil prices. White House press secretary Karoline Leavitt said in a statement that its temporary suspension “will allow vital resources like oil, natural gas, fertilizer, and coal to flow freely to U.S. ports for sixty days.”
Oil popped in the prior trading day after Trump said in a Truth Social post that the U.S. did not need help from NATO allies in the Middle East. The president had signaled earlier this week that a coalition may be formed to help protect ships attempting to travel through the Strait of Hormuz, though some countries were “less than enthusiastic” to participate.
“Due to the fact that uncertainty is higher today, I think we’re in a higher volatility regime,” said Anshul Sharma, chief investment officer at Savvy Wealth.
“If oil stays elevated here … we know that’s going to filter through into the economy,” he added. “It’s going to make the Fed’s job harder in terms of balancing their mandates.”
Investors are now looking ahead to the Fed’s interest rate decision expected on Wednesday. Markets are expecting the central bank to keep interest rates unchanged in a range between 3.5% to 3.75%. Traders will be watching for any guidance from Fed Chair Jerome Powell on whether oil prices could impact future monetary policy
With respect to earnings, eyes are on Micron Technology, as the chipmaker is slated to release its latest quarterly results after the bell Wednesday. The stock has been on a tear this year, rallying nearly 62% amid soaring demand for high-bandwidth memory.
