Wall Street’s main indexes fell on Wednesday after a Labor Department report showed producer prices rose more than expected in February, diminishing investor expectations for a Federal Reserve interest rate cut this year.

The Producer Price Index (PPI) increased 3.4% year-on-year, surpassing economists’ forecast of 2.9%. Rising oil and shipping costs, fueled by the ongoing Middle East conflict, could further accelerate inflation, according to analysts.

“This will be the third PPI in a row that has come above expectations and further cements the idea that the Fed will not be cutting rates anytime soon,” said Art Hogan, chief market strategist at B. Riley Wealth.

Market Reaction and Sector Performance

Following the report, Treasury yields spiked, weighing on S&P 500 sectors with higher dividend payouts, including healthcare and consumer staples, which each fell more than 1%.

At 10:00 a.m. ET, major indexes were down:

• Dow Jones Industrial Average: -170.46 points (-0.35%) to 46,826.67
• S&P 500: -12.95 points (-0.19%) to 6,703.14
• Nasdaq Composite: -36.29 points (-0.16%) to 22,441.23

The CBOE volatility index (VIX) rose 0.64 points to 23, reflecting elevated market uncertainty amid geopolitical tensions.

Oil, Energy, and Travel Stocks

Brent crude climbed toward $110 a barrel after attacks on Iran’s South Pars and Asaluyeh oil facilities. Prices had eased earlier with the resumption of crude exports from Iraq’s Kirkuk fields.

Travel stocks were mixed: Delta (DAL) slipped 0.2%, while American Airlines (AAL) gained 0.4%, as investors balanced higher energy costs against projected fare hikes.

Corporate Movers

• Micron (MU) rose 0.8% ahead of earnings.
• SanDisk (SNDK) added 1.8%.
• Lululemon (LULU) gained 3.3% after quarterly results, amid a proxy battle calling for board refreshes.
• Macy’s (M) jumped 8.3%, citing easing tariff impacts later in the year.
• Asset managers such as Ares (ARES), KKR (KKR), and Apollo (APO) rebounded about 3% each after recent private credit concerns.
• General Mills (GIS) fell 1.6% as sales declined in Q3 due to weak demand.

On the NYSE, declining issues outnumbered advancers 1.87-to-1, while on the Nasdaq, the ratio was 1.94-to-1. The S&P 500 posted 13 new 52-week highs and 11 lows, while the Nasdaq Composite recorded 19 new highs and 111 new lows.

Investors now focus on the Federal Reserve’s two-day meeting, expected to leave benchmark interest rates unchanged, while market participants await Chair Jerome Powell’s comments on inflation, energy costs, and the broader economic outlook.