Wall Street closed lower on Wednesday, as geopolitical tensions in the Middle East and a more cautious tone from the Federal Reserve prompted a return to caution among investors.
Ver más: Exclusiva: Cathie Wood ve opciones en América Latina y dice que no hay una burbuja en la IA
Stocks and bonds declined, while rising oil prices amplified inflation concerns and reduced bets on near-term interest rate cuts.
The S&P 500 fell approximately 1.36%, snapping a two-session winning streak, while increasing Treasury bond yields reflected a shift in monetary policy expectations. The Dow Jones Industrial Average shed 1.63% and the Nasdaq Composite lost 1.46%.
The market movement was closely tied to the surge in Brent crude, which solidified above $107 per barrel following escalating conflict between Iran and Israel. This conflict has begun to impact key energy infrastructure and threaten critical routes like the Strait of Hormuz.
Geopolitical factors dominated market sentiment. Iran warned that energy assets in the Gulf are now “legitimate targets,” raising the risk of prolonged disruptions to global supply.
Partial shutdowns in crude production in countries like Saudi Arabia, the United Arab Emirates, and Qatar, coupled with damage to strategic facilities such as the South Pars field, reinforced the perception of a supply shock that is keeping oil as the primary market catalyst.
Adding to the negative tone, the Federal Reserve’s recent statements contributed to the downturn. The central bank held its benchmark interest rate steady in a range of 3.5% to 3.75%, but Chairman Jerome Powell’s comments were interpreted as less dovish than anticipated.
“We think we’ve been in a rolling recession and that we are actually going to see some negative quarters here and that’s because the velocity of money is collapsing,” Cathie Wood, Ark Invest founder and CEO, said in a recent interview, as reported by Fortune. This assessment suggests a potential for economic slowdown despite ongoing efforts to manage inflation.
→ Suscríbete al newsletter Línea de Mercado, una selección de Bloomberg Línea con las noticias bursátiles más destacadas del día.
Powell acknowledged that progress in moderating inflation has been slower than expected, noting that “the forecast is that we will be making progress on inflation, not as much as we had expected, but there will be progress.”
He also emphasized the complexity of the current scenario, describing an economy caught between opposing pressures. “We are balancing these two objectives in a situation where the risks to the labor market are down, which would call for lower rates, and the risks to inflation are up, which would imply higher rates or not cutting,” he stated.
“We are in a difficult situation… perceive like we are right at that upper bound of restrictive versus not restrictive,” Powell added.
The market reacted by adjusting its expectations: while the Fed maintains a rate cut in 2026 and another in 2027 on its roadmap, operators significantly reduced the probability of monetary easing this year.
As Luis Alvarado of Wells Fargo Investment Institute summarized, “the balance of risks has shifted and the bar for cutting rates has risen significantly.”
Powell also sought to downplay fears of a stagflation scenario, dismissing parallels with the 1970s. “I always have to point out that was a term from the 70s when unemployment was in the double digits and inflation was really high,” he explained. “I would reserve the term stagflation for a much more serious set of circumstances.”
Ver más: Este banco plantea tres escenarios para la guerra con Irán y en uno el petróleo llega a US$120
Beyond the central bank’s messaging, macroeconomic data reinforced the narrative of persistent inflationary pressures. The Producer Price Index surprised to the upside in February, rising 0.7% month-over-month, indicating that cost pressures were already building even before the recent surge in oil prices.
According to Thomas Ryan of Capital Economics, this confirms that “stronger inflationary pressures are already filtering through supply chains.”
In commodity markets, gold extended its negative streak, posting its sixth consecutive decline, pressured by a strengthening dollar and rising real yields. The metal lost more than 3% in the session, a move some analysts attributed to liquidations to cover losses in other assets amid the risk-off environment.
How is the dollar performing in Latin America?
The dollar had moderated its upward momentum after the rally recorded last week, but concerns surrounding the war in Iran and the wholesale inflation data renewed the currency’s strength against its major peers. Francesco Pesole, an analyst at ING, warned that markets have also shifted their attention to the reaction of central banks, amid “few signs of an imminent de-escalation” in Iran.
Latin American currencies fell. The Chilean peso (USDCLP), the Brazilian real (USDBRL), and the Mexican peso (USDMXN) retreated, as did the Colombian peso (USDCOP), the Peruvian sol (USDPEN), and the Argentine peso (USDARS).
The region’s currencies attempted to recover from the initial impact of the conflict in Iran, but the movement remains closely linked to global market sentiment. According to BBVA’s currency strategy team, “LatAm FX continue to take direction from broader market sentiment, which in turn is linked to the outlook for the conflict in Iran.”
BBVA anticipated that “markets may be sensitive to the FOMC decision in the US on Wednesday, as well as headlines related to Iran,” while noting that the impact on Latin American currencies will be reflected with a lag due to the region’s market closing times.
Corporate News of the Day:
– The European Union presented the “EU Inc.” plan, a Commission-led initiative to simplify the creation and expansion of startups in the bloc, aiming to close the competitive gap with the United States and China. The program proposes a single framework for company formation valid in all 27 countries, allowing companies to be created in less than 48 hours fully digitally, without minimum capital requirements, and with simplified tax and governance rules.
– Macy’s (M) shares rebounded after presenting a quarterly sales forecast above expectations, up to US$4.630 million and comparable growth of up to 1.5%, driven by resilient consumer spending in middle- and high-income segments, although with persistent weakness in lower-income consumers. Despite a strong start to the year and results that exceeded estimates, the company adopted a cautious tone for the remainder of 2026.
– General Mills (GIS) reported quarterly results below Wall Street expectations, affected by a 3% drop in organic revenue, deeper than anticipated, and adjusted earnings lower than the consensus, in a context of lower demand and price pressure amid more cautious consumers. The company has reduced prices on nearly two-thirds of its portfolio in North America to stimulate sales, but the impact is still limited.
– Geely reported a record profit in 2025 that exceeded market estimates, with earnings of 16.850 billion yuan (US$2.400 million) and a 25% increase in revenue, driven by the strong performance of models such as the EX2 and Zeekr SUVs, allowing it to gain market share and approach BYD in sales, even surpassing it globally in early 2026.
This story was updated with market closings.
