US Stocks Slump on Oil, Inflation, Inte03/18 15:28

   U.S. stocks slumped Wednesday after a report said inflation was primed to 
worsen even before the war with Iran caused oil prices to spike. That and 
comments from the head of the Federal Reserve pushed Wall Street to see less 
chance of getting the lower interest rates that it loves.

   NEW YORK (AP) -- U.S. stocks slumped Wednesday after a report said inflation 
was primed to worsen even before the war with Iran caused oil prices to spike. 
That and comments from the head of the Federal Reserve pushed Wall Street to 
see less chance of getting the lower interest rates that it loves.

   The S&P 500 fell 1.4% and flipped to a loss for the week so far. The Dow 
Jones Industrial Average dropped 768 points, or 1.6%, and the Nasdaq composite 
slid 1.5%.

   The losses deepened after the Fed decided to keep its main interest rate 
steady, instead of resuming cuts meant to give the job market and economy a 
boost. Fed officials are still penciling in one more cut by the end of 2026, 
but Chair Jerome Powell suggested those projections may be worth less than 
usual because of how much more uncertainty exists about inflation and the 
economy.

   "We just don't know," Powell said about what will happen with oil prices, 
along with how long President Donald Trump's tariffs will take to work their 
way fully through the system.

   For oil, the price for a barrel of Brent crude has jumped from roughly $70 
per barrel before the war to $107.38 on Wednesday, up 3.8% from the day before. 
The price for a barrel of benchmark U.S. crude got to nearly $99 before 
settling at $96.32.

   Oil prices have soared because the war has disrupted the Persian Gulf's 
energy industry. Iran's state television said Wednesday that the Islamic 
Republic would be attacking oil and gas infrastructure in Qatar, Saudi Arabia 
and the United Arab Emirates after an attack on facilities associated with its 
offshore South Pars natural gas field.

   If the disruptions keep oil and gas prices high for long, they could create 
a debilitating wave of inflation for the global economy.

   A report released Wednesday morning showed inflation pressures were already 
building before the war began. It said inflation at the U.S. wholesale level 
unexpectedly accelerated last month to 3.4%.

   Such numbers were likely factors in keeping the Fed on hold Wednesday. A cut 
to rates would give the economy and investment prices a boost, and Trump has 
been angrily calling for them. But lower interest rates would also worsen 
inflation.

   Only one Fed voter wanted to lower rates this time around, and the tally was 
11-1 to keep rates steady.

   Powell said the rule of thumb has been for the Fed to look through jumps in 
oil prices, which could prove to be only temporary, but he said that works only 
if expectations for upcoming inflation don't spike themselves. He also noted 
that several Fed officials downgraded their forecasts for rate cuts this year 
to one from two, even though the overall median Fed official is still calling 
for one.

   That helped push traders to forecast less than a coin flip's chance that the 
Fed will cut its main interest rate just once by the end of this year, at 49%. 
That's down sharply from the 95% probability they saw a month ago, according to 
data from CME Group.

   That sent Treasury yields upward in the bond market, along with the 
higher-than-expected update on inflation at the wholesale level. The yield on 
the 10-year Treasury climbed to 4.26% from 4.20% late Tuesday and from just 
3.97% before the war with Iran started.

   Higher Treasury yields grind down on prices for all kinds of investments, 
from stocks to crypto to gold.

   Gold dropped back below $5,000 per ounce after falling 2.2% to settle at 
$4,896.20. It's lower than it was at the start of the war, despite its 
reputation as a safe haven during uncertain times. Because it pays its owners 
nothing, gold begins to look less attractive to investors when Treasury bonds 
are paying more in interest.

   On Wall Street, Macy's jumped 4.7% after reporting stronger profit and 
revenue for the latest quarter than analysts expected. The retailer behind 
Bloomingdale's and Bluemercury is in the midst of a turnaround plan to drive 
growth under CEO Tony Spring.

   But General Mills fell 3% after the company behind the Pillsbury, Progresso 
and Wheaties brands reported a weaker profit for the latest quarter than 
analysts expected. CEO Jeff Harmening is investing in its brands in hopes of 
driving growth, and it's sticking with its forecast for profit over the full 
fiscal year.

   All told, the S&P 500 fell 91.39 points to 6,624.70. The Dow Jones 
Industrial Average dropped 768.11 to 46,225.15, and the Nasdaq composite sank 
327.11 to 22,152.42.

   In stock markets abroad, indexes fell in Europe following a stronger finish 
in Asia.

   Tokyo's Nikkei 225 rallied 2.9% after the government reported exports in 
February were higher than expected. South Korea's Kospi leaped 5%.