S&P 500, Dow end lower as escalating Iran war sours risk appetite

By Stephen Culp and Johann M Cherian

NEW YORK, March 11 (Reuters) – U.S. stocks closed lower on Wednesday as markets largely looked past a tame inflation report, focusing instead on intensifying hostilities and mounting repercussions related to the U.S.-Israeli war on Iran.

Trade was choppy for much of the session as investors were caught in a tug-of-war of oil supply concerns. Iran continued to attack ships in the blockaded Strait of Hormuz, but OPEC assured markets that Saudi Arabia had ramped up production and the International Energy Agency (IEA) agreed to release 400 million barrels of oil from its strategic reserves.

The Dow logged the steepest percentage drop among the three major U.S. equity indexes, while chip manufacturers lent support to the tech-laden Nasdaq.

The Labor Department’s Consumer Price Index (CPI) indicated that inflation remained moderate last month, matching analyst expectations.

Annual CPI growth is now within half a percentage point of the U.S. Federal Reserve’s 2% target. Still, markets shrugged off the report, as it predated the war on Iran, which has sent crude prices soaring and could stoke inflation.

Inflation jitters mounted after Iran’s military command said the world should prepare for crude prices to hit $200 per barrel, more than double their current level.

“In such an uncertain environment, the markets and investors are kind of starving for any signal, in one direction or another,” said Matthew Keator, managing partner in the Keator Group, a wealth management firm in Lenox, Massachusetts. “There have been these false or inaccurate reports, and the markets are swinging on that type of news.”

“It’s all about the consumer, and how the shock of a sustained increase in oil prices is going to affect the consumer’s pocketbook and their spending habits,” Keator added.

The Fed is widely expected to let its key interest rate stand at its upcoming policy meeting, during which policymakers are likely to weigh the possibility of spiking prices against signs of a softening jobs market, a combination that raises concerns over potential stagflation.

“I think the word ‘transitory’ may come back,” said Chuck Carlson, chief executive officer at Horizon Investment Services in Hammond, Indiana. “I think they’re probably more concerned about jobs than they are about inflation right now, the the spike in oil notwithstanding.”

According to preliminary data, the S&P 500 lost 5.93 points, or 0.09%, to end at 6,775.55 points, while the Nasdaq Composite gained 17.16 points, or 0.08%, to 22,714.27. The Dow Jones Industrial Average fell 291.12 points, or 0.61%, to 47,415.39.

Oracle boosted tech shares after it provided better-than-anticipated revenue guidance on expectations that the artificial intelligence-related spending boom will extend through 2027.

JPMorgan Chase marked down the value of certain loans held by private-credit groups and is tightening its lending to the sector, a report said.

Shares of Ares Management and Apollo Global both fell on the news.

Campbell’s tumbled after the packaged food company cut its annual forecasts and warned of increasing pressure in the second half from revised U.S. tariffs.

Defense company AeroVironment slid after forecasting 2026 adjusted profit below estimates.

(Reporting by Stephen Culp; Additional reporting by Johann M Cherian and Utkarsh Tushar Hathi in Bengaluru; Editing by David Gregorio)