The relief rally that had been quietly building to start the week got taken out behind the woodshed on Wednesday, courtesy of a hot PPI print, a Fed that’s stuck between a rock and an oil barrel, and a Middle East conflict that just won’t stop escalating. By the close, the S&P 500 had shed 1.4%, the Nasdaq 100 fell 1.3%, and the Dow dropped 1.6% — hitting the S&P’s weakest level since November 2025.
The morning got off to a rough start when February’s PPI came in scorching hot, jumping 0.7% and more than doubling expectations. That kind of number would have been ugly on any day. On a Fed day, with oil already elevated and the Strait of Hormuz in the headlines, it was particularly bad timing.
As widely expected, the FED voted 11-1 to hold rates steady in the 3.5%–3.75% range. But what the Fed said around that decision was more important than the decision itself. Powell made clear that developments in the Middle East will be a major factor in inflation and that persistently higher energy prices could preclude any rate cuts in 2026.
Officials raised their core inflation forecast to 2.7% by year-end and nudged GDP projections slightly higher to 2.4%.
On the geopolitical front, things continued to deteriorate. Energy markets are having to continuously price in a more prolonged disruption to oil and gas flows through the Strait of Hormuz, with no sign of de-escalation, and LNG flows are still choked off.
Iran is now warning of a major response, with threats that facilities in Qatar, Saudi Arabia, and the UAE could be targeted. Reports that NATO is declining to help secure the strait didn’t help sentiment. Brent crude was hovering near $110 in late trading.
Energy and industrials were the only sectors to finish in the green — everything else got hit. The Dow’s decline was led by McDonald’s, P&G, and Home Depot, each dropping more than 3%. Visa and Mastercard fell 3.1% and 3.7%, respectively. The Mag 7 was broadly red — Amazon, Apple, and Microsoft each declined more than 1% — while Nvidia managed to buck the selling pressure and finish slightly positive. That’s worth noting given the broader tape.
The real fireworks came after the bell from Micron. Fiscal Q2 revenue came in at $23.86 billion, demolishing the $20.07 billion consensus, with the company’s entire 2026 HBM capacity already sold out and the board approving a 30% dividend hike. Q3 guidance was set at $33.5 billion — well above the $22.5 billion Wall Street had penciled in. The numbers were genuinely jaw-dropping. And then the stock dipped after hours anyway. Sell-the-news lives on, even when the news is spectacular.
The VIX closed back above 23, Treasury yields climbed, and the market is now pricing in the very real possibility that the Fed is frozen for the foreseeable future. The confluence of reaccelerating inflation, $110 Brent crude, and a geopolitical crisis with no exit ramp makes for a treacherous setup. The two-day bounce is now essentially gone. Energy is the only sector that gets to celebrate — everyone else is just managing risk.
Shit needs to change quickly, or this goes lower. No calls, no picks, until we find normality.
See you in the morning. A massive move up is forthcoming.