Markets absorb the cost of waiting as inflation anchors at $105 oil

Stocks fell, with the Dow dropping nearly 800 points, its lowest close since November. The S&P 500 fell 1.4% and the Nasdaq lost 1.5%. The sell-off followed the Federal Reserve’s decision on March 18 to hold interest rates steady, a move driven by lingering inflation and geopolitical uncertainty from the war in Iran. Earlier that day, a measure of wholesale price inflation came in hotter than expected. Investors responded by selling bonds, pushing the 10-year U.S. yield up nearly 6 basis points to 4.26%. Bond yields rise as prices fall, and the move reflected renewed concern that inflation is not cooling as hoped. Oil prices added to the pressure, with Brent crude rising nearly 6% to $105 per barrel. That kept the nationwide average gas price at $3.86 per gallon, according to GasBuddy. High energy costs feed directly into consumer prices, reducing the Fed’s room to cut rates. Fed Chair Jerome Powell cited the war in Iran as a source of uncertainty, reinforcing the central bank’s cautious stance. Wall Street’s “fear gauge,” the VIX, spiked nearly 10%. Financial markets now price in a longer wait for rate relief, with inflation anchored by energy costs.