US Stocks Slip: Ceasefire Doubts, Inflation Weigh
Why it matters: Money market participants now see only a 30% chance of a 25 basis-point interest rate cut by end-2026.
- US stocks slipped, with the Dow falling 0.11%, the S&P 500 losing 0.09%, and the Nasdaq Composite down 0.21% by 10:04 a.m. ET.
- President Donald Trump vowed to maintain military assets in the Middle East until a peace deal with Iran is reached, warning of escalation if compliance fails.
- Israel continued bombing targets in Lebanon, while Tehran stated no deal would occur without a cessation of these bombings.
- Oil prices rebounded due to uncertainty around energy shipments through the Strait of Hormuz, though they remained below $100 a barrel.
- S&P 500 energy sector added 1.3%, and utilities stocks gained 1.6%, benefiting from the geopolitical tensions.
- Tech stocks were the biggest drag, with Microsoft falling 1.7% and Apple down 0.7%; the iShares Expanded Tech-Software ETF dropped 3.3%.
- Amazon.com gained 1.7% after its CEO reported AI services at its cloud-computing unit are generating over $15 billion in annualized revenue.
- US inflation increased as expected in February and likely rose further in March, with economic growth slowing more than estimated in Q4.
- Allianz Investment Management's Charlie Ripley noted that while a diplomatic approach to Iran initially calmed markets, elevated inflation pressures will keep the Fed on hold.
- Money market participants now expect only a 30% chance of a 25 basis-point interest rate cut by end-2026, down from 56% a day prior.
- Constellation Brands jumped 5% after reporting a smaller-than-expected drop in Q4 sales, while Applied Digital shares fell 7.1% due to a widened Q3 net loss.
US stocks dipped as renewed doubts about a Middle East ceasefire, coupled with persistent inflation concerns, made investors cautious. While energy and utility stocks saw gains, major tech players like Microsoft and Apple weighed down the S&P 500 and Nasdaq, despite Amazon's AI revenue boost.
