To The Moon

U.S. stocks fell Wednesday as rising oil prices overshadowed a relatively calm inflation report, highlighting how energy markets are currently dominating investor sentiment.

The Dow Jones Industrial Average dropped 289 points, or 0.6%, while the $S&P 500(.SPX)$ slipped 0.1%. The tech-heavy Nasdaq Composite managed to edge 0.1% higher.

Despite the release of February’s inflation data showing stable price growth, markets continued to focus on the surge in global oil prices following the Iran conflict.

Top Gainer: $Mosaic(MOS)$ (+10.1%). Biggest Decliner: $Fair Isaac(FICO)$ (-9.3%)

Best Sector: Energy (+2.5%). Worst Sector: Consumer Staples (-1.3%)

Oil Prices Drive Market Direction

Oil

Oil remains the dominant force shaping market moves.

Both major crude benchmarks, West Texas Intermediate (WTI) and Brent crude, rose about 4.5% during the session.

$XLE

The rally came amid ongoing supply concerns tied to the war involving Iran and disruptions in key Middle Eastern shipping routes. Since the conflict began nearly two weeks ago, stocks have largely moved inversely to oil prices, with equities declining when energy prices spike.

Inflation Data Shows Stable Price Growth

The latest inflation report from the Bureau of Labor Statistics showed that the Consumer Price Index (CPI) rose 2.4% year over year in February, matching January’s pace and roughly in line with economists’ expectations.

Core inflation, which excludes volatile food and energy prices—came in slightly higher at 2.5% annually.

While the data appeared relatively benign, it does not yet reflect the 33% surge in oil prices since the start of the Iran conflict. Economists expect energy-driven inflation pressures to show up in upcoming reports.

[Call] Oil Shock Could Hit Economic Growth

Higher energy prices have broader implications for the economy, rising fuel costs tend to:

• Increase overall inflation

• Reduce consumer purchasing power

• Force businesses to cut hiring or investment

The economic impact will largely depend on how high oil prices climb.

Analysts estimate:

• Around $100 per barrel: could reduce U.S. GDP growth by roughly 0.1%

• Above $150 per barrel: could trigger a recession

For now, investors are watching oil markets closely as the conflict evolves.

[Call] CPI Still Matters for Investors

Although the inflation report received limited attention from markets, it still provides an important baseline for measuring the impact of the energy shock.

Several components of the CPI report suggest underlying price pressures remain present:

• Food and energy prices were already rising before the oil surge

• Appliance and apparel prices increased due to tariffs

• Software prices jumped 6.5% month over month

These trends could translate into stronger readings for the Personal Consumption Expenditures Price Index, the inflation gauge preferred by the Federal Reserve.

[Call] Inflation Still Above the Fed’s Target

Economists at Bank of America and Citigroup estimate that core PCE inflation rose 0.4% in February, which would bring the annual rate to around 3.1%.

That remains well above the Fed’s 2% inflation target, suggesting policymakers may be reluctant to cut interest rates in the near term.

Markets widely expect the Federal Reserve to hold interest rates steady at the March 17–18 meeting, though the outlook beyond that remains uncertain.

Key Earnings to Watch

Several major companies are scheduled to report quarterly results:

• $Adobe(ADBE)$

• Dollar General

• Ulta Beauty

• Lennar

• Dick’s Sporting Goods

• $Li Auto(LI)$

Their results could provide further insight into consumer demand and corporate resilience amid rising energy costs.

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This summary is for informational purposes only and does not constitute financial advice. Investors should conduct their own research before making investment decisions.

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