Markets Drop Fed Rate Cut Bets for 2026

Wall Street’s major indexes slid on Tuesday, pressured by another spike in oil prices after the U.S.-Israeli conflict with Iran escalated—reviving anxiety around inflation and the direction of interest rates. The Dow Jones Industrial Average dropped 831.86 points, or 1.70%. In late morning trading, the S&P 500 and Nasdaq each slipped roughly 1.6%-1.7%. The VIX volatility index jumped to its highest level in three months. “If oil stays elevated, it could reignite inflation and push interest rates higher, and that may not be good for stock prices,” said Robert Pavlik, senior portfolio manager at Dakota Wealth.