US stocks fall as Brent crude jumps toward $110 per barrel

U.S. stocks retreated Wednesday as rising oil prices intensified inflation concerns, compounded by the ongoing conflict with Iran. The S&P 500 fell 0.6%, ending its positive streak this week, while the Dow Jones Industrial Average dropped 380 points, or 0.8%. The Nasdaq composite declined 0.6%.

Brent crude, the international oil benchmark, surged 4.7% to $108.27 per barrel, while U.S. oil rose 1.5% to $97.61. Energy markets have experienced significant volatility since the war with Iran began, creating disruptions throughout the Persian Gulf’s energy sector.

The situation escalated Wednesday when Iranian state television announced plans to attack oil and gas infrastructure in Qatar, Saudi Arabia, and the United Arab Emirates, following an assault on facilities connected to Iran’s offshore South Pars natural gas field.

Market analysts warn that prolonged high energy prices could trigger a wave of inflation throughout the global economy, potentially creating widespread economic challenges. This concern gained additional weight after Wednesday’s economic report revealed that U.S. wholesale inflation unexpectedly accelerated to 3.4% last month, even before the war’s impact was factored in.

These inflationary pressures have solidified Wall Street’s expectation that the Federal Reserve will maintain current interest rates rather than implementing cuts at the conclusion of its meeting today. While rate cuts would typically stimulate the job market and investment prices—something President Trump has vocally demanded—they would also risk fueling further inflation.

Investors are particularly focused on whether Fed officials will maintain their previous outlook suggesting a potential rate cut sometime during 2026, though the Iran conflict has complicated economic forecasting across all sectors.

The war’s impact on American consumers is already evident at gas pumps nationwide. The average price for a gallon of gasoline spiked overnight to $3.84, representing a dramatic increase from under $3 just last month. This surge will inevitably influence inflation metrics for at least the next several months.

Global oil flows remain significantly constrained, according to ING Bank analysts Warren Patterson and Ewa Manthey. There were growing hopes that Iran might permit more vessels through the Strait of Hormuz, a critical waterway that handles approximately one-fifth of the world’s crude oil transportation. However, the strait has been largely closed as Iran blocks ships connected to the United States, Israel, and their allies.

Corporate earnings reports provided mixed signals to investors. Macy’s shares jumped 5.2% after reporting quarterly profits and revenue that exceeded analyst expectations. The retailer, which owns Bloomingdale’s and Bluemercury, continues to implement a turnaround strategy under CEO Tony Spring’s leadership.

Meanwhile, General Mills slipped 1% after reporting lower-than-anticipated quarterly profits. CEO Jeff Harmening continues investing in the company’s portfolio of brands—which includes Pillsbury, Progresso, and Wheaties—to stimulate growth, while maintaining the company’s full-year profit outlook.

In the bond market, Treasury yields increased following the higher-than-expected wholesale inflation data. The 10-year Treasury yield rose to 4.22% from 4.20% the previous day, significantly higher than the 3.97% recorded before the Iran conflict began.

International markets showed varied performance. European indexes generally declined, while Asian markets finished stronger. Tokyo’s Nikkei 225 rallied 2.9% after the Japanese government reported February exports exceeded expectations. South Korea’s Kospi demonstrated even stronger performance, leaping 5%.

As the Iran conflict continues to unfold, market participants remain vigilant about potential disruptions to global energy supplies and their broader economic implications, particularly regarding inflation and central bank policies in the months ahead.