Wall Street edges lower after producer prices data, Fed rate decision in focus

Wall Street’s main stock indices edged lower on Wednesday after data showed February producer price inflation increased more than expected, and ahead of the Federal Reserve’s interest rate decision.

As of 12:55 p.m. Eastern Time, the S&P 500 fell 0.6%, the Dow Jones Industrial Average was down 0.8%, and the Nasdaq Composite was 0.6% lower.

At 10:00 a.m. ET, the Dow Jones Industrial Average fell 170.46 points, or 0.35%, to 46,826.67, the S&P 500 lost 12.95 points, or 0.19%, to 6,703.14 and the Nasdaq Composite shed 36.29 points, or 0.16%, to 22,441.23.

At the open, the Dow Jones Industrial Average fell 79.3 points, or 0.17%, to 46,913.93. The S&P 500 fell 18.9 points, or 0.28%, to 6,697.16​, while the Nasdaq Composite dropped 57.6 points, or 0.26%, to 22,421.962.

US wholesale inflation — measured by the Producer Price Index (PPI) —climbed by 0.7% in February on a monthly basis, significantly outstripping the anticipated 0.3% increase. On an annual basis, the PPI rose to 3.4% in February, compared with a 2.9% rise expected by analysts.

"The market is seemingly braced for a more cautious-minded Fed when it comes to cutting rates in light of the surge in energy prices and the ongoing war with Iran," said Briefing.com analyst Patrick O'Hare, according to AFP.

"The February Producer Price Index is only going to add to that perspective," added O'Hare.

Financial markets remain on edge following a fresh spike in energy costs after Iran cautioned Persian Gulf nations that various energy facilities are now “legitimate targets”. This warning followed an Israeli strike on Iran’s massive South Pars gas field, which triggered significant volatility across global oil and gas sectors.

In response, US President Donald Trump issued a temporary waiver for a century-old maritime mandate to reduce the expenses associated with transporting oil, gas, and other essential commodities domestically. This move represents his latest effort to mitigate rising energy prices exacerbated by the ongoing conflict in Iran.

Federal Reserve policymakers, who are broadly expected to maintain current interest rates at the end of their two-day deliberations this Wednesday, are now shifting their attention toward escalating energy expenses. The surge in petroleum prices threatens to intensify inflationary trends and potentially dampen overall economic growth.

In the bond market, the yield on the 10-year Treasury rose to 4.22% from 4.20% late on Tuesday.

Key Stock Movers

Macy's stock jumped 8% after results from the department store chain’s key holiday-season quarter topped Wall Street estimates.

Micron shares gained 0.8% ahead of the chipmaker's earnings after the market close.

SanDisk stock rose 1.8%.

General Mills stock dropped 1.6% as packaged foods maker’s sales declined in the third quarter.

Lululemon equity gained 3.3% after the yoga-wear maker's quarterly earnings.

Shares of asset managers such as Ares, KKR and Apollo surged about 3% each, rebounding from previous week’s losses on private credit quality concerns.

Bullion Market

Gold prices tumbled on Wednesday, dragged down by a firmer US dollar and a jump in oil prices.

By 9:17 a.m. ET (1317 GMT), spot gold fell 3.2% to $4,844.20 per ounce. US gold futures for April delivery dropped 3.2% to $4,845.50.

Among other metals, spot silver fell 4.2% to $75.93 per ounce, platinum was down 4.5% at $2,028.12, and palladium lost 4.7% to $1,526.20.

Energy Prices

Oil and European natural gas prices jumped as Iran listed energy assets in the region that it would target in response to a US and Israeli attack on its upstream industry.

Brent oil climbed as much as 6.1% to a high of $109.75 a barrel, while Europe’s gas benchmark jumped as much as 9.1%, according to data from ICE Futures Europe.