Markets drop on Fed pause as oil and inflation defy cooling

The Dow Jones Industrial Average fell nearly 800 points, or 1.6%, after the Federal Reserve left interest rates unchanged on March 18, 2024, citing uncertainty from the war in Iran and ongoing inflation pressures. The S&P 500 dropped 1.4%, reaching its lowest level since November, while the Nasdaq Composite declined 1.5%. Wall Street’s “fear gauge,” the VIX Composite, spiked nearly 10%. The Fed’s decision not to raise rates came despite a hotter-than-expected reading on wholesale price inflation. Investors responded by selling bonds, pushing the yield on the 10-year U.S. note up to about 4.26%, a rise of nearly 6 basis points. Bond yields move inversely to prices. Oil prices added to inflation concerns, with Brent crude rising nearly 6% to around $105 a barrel. That kept the nationwide average for a gallon of gas at $3.86, according to GasBuddy’s tracker. Fed Chair Jerome Powell pointed to geopolitical uncertainty as a key reason for the central bank’s cautious stance.