New York, March 19, 2026, 10:12 EDT
Stocks slipped at the open Thursday, with sharp moves in oil after strikes hit Gulf energy sites. Investors faced a fresh inflation jolt, barely a day since the Federal Reserve flagged the Iran war as a major wild card for the outlook. The Dow started down 90.3 points, the S&P 500 shed 0.63%, and the Nasdaq slid 1.27%. Brent crude, the global benchmark, had spiked to $119.13 a barrel earlier.
This is hitting now because pricier crude is showing up fast in both fuel and shipping bills—right when traders had been counting on the Fed to start cutting. “The market is trapped amidst a whole lot of reasons to be nervous,” said Mark Spindel, chief investment officer at Potomac River Capital. Futures are only pricing in about 14 basis points, or 0.14 percentage point, of rate cuts by December—down sharply from the two quarter-point cuts that were expected back in late February. Reuters
Fed Chair Jerome Powell warned that higher energy prices will “push up overall inflation” in the short run, but he pushed back against any comparisons to 1970s-era stagflation, saying the U.S. isn’t close. The central bank left its policy rate unchanged at 3.50%-3.75% and maintained its outlook for a single rate cut this year. Officials, however, now see inflation at 2.7% in 2026, up from the previous 2.4% projection. Reuters
Wednesday’s sharp drop underscored just how fragile sentiment has become. The S&P 500 slid roughly 1.4%, marking its weakest close since late last year. Morgan Stanley economists pointed to hotter-than-expected February producer prices, which bumped their annualized core PCE forecast—the Fed’s preferred inflation measure—to 4.56%. And that’s before the full impact of surging oil prices filters through.
Energy prices jumped, with Brent climbing 5.6% to $113.40 by late trade. U.S. West Texas Intermediate spiked as high as $100.02 before slipping back to $96.39. The moves followed Iranian strikes across Qatar, Saudi Arabia, the UAE and Kuwait, after an Israeli attack on Iran’s South Pars field. QatarEnergy reported “extensive damage” from missile impacts at Ras Laffan, the world’s largest LNG export hub. Reuters
Charu Chanana, Saxo’s chief investment strategist in Singapore, described the shift as a “turning point,” saying the conflict was now disrupting “the plumbing of the global energy system.” Hartree Partners’ Rob McLeod, who leads energy price risk solutions, warned some of the damaged facilities might be out of action for months or even years, rather than weeks. Reuters
The turmoil isn’t just hitting Wall Street. European shares tumbled, with gas prices in Europe soaring up to 28%. Both the Bank of England and the European Central Bank left interest rates unchanged, citing concern that another energy surge might force them to keep borrowing costs elevated.
Wall Street economists are shifting their expectations. Morgan Stanley is now calling for the Fed’s next rate cut in September, not June, lining up with Goldman Sachs and Barclays. Jack Ablin, chief investment officer at Cresset Capital, put it this way: Powell is “on the lookout for inflation.” Reuters
A possible relief valve: Treasury Secretary Scott Bessent floated the idea that Washington could lift sanctions on roughly 140 million barrels of Iranian oil, currently stuck on tankers. That might take some of the pressure off fuel prices. Still, trouble at the Strait of Hormuz—chokepoint for around 20% of the world’s oil and LNG—continues to snarl shipments.
Investors are pushing bets on rate cuts further out, and that’s hitting more than just heavyweight tech stocks. The Russell 2000—a barometer for smaller U.S. companies that tend to react first to higher rates—is down 10% from its all-time intraday high.
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