US stocks skid as Middle East turmoil fans inflation fear

The S&P 500 declined 1.51 per cent to end the session at 6,506.48 points, its lowest since September. Read more at straitstimes.com.

NEW YORK - Wall Street ended sharply lower on March 20, with the S&P 500 closing at its lowest in six months, as the US-Israeli war against Iran entered its fourth week, deepening worries about inflation and the potential for higher interest rates. The conflict in the Middle East showed no signs of easing.

The US military was deploying an amphibious assault ship with thousands of additional Marines and sailors to the Middle East, while Iran’s new supreme leader hailed Iran’s “unity” and “resistance.”

“The market is finally settling into the idea that this may go on longer than initially expected, and I think that’s why markets are selling off. This conflict may go on not for just a few weeks, but maybe beyond several months,” said Mr Jake Dollarhide, CEO of Longbow Asset Management in Tulsa, Oklahoma.

Wall Street’s most valuable companies dropped, with Nvidia and Tesla losing over 3 per cent each. Alphabet , Meta Platforms and Microsoft were all down about 2 per cent. US Treasuries fell for a third session, in step with a broader selloff in UK and European government bonds, as the Middle East conflict kept oil prices elevated and reinforced inflation worries.

US rate futures show the Fed is more likely to raise interest rates than cut them by the end of 2026, according to CME’s FedWatch tool.

“We just have a classic environment that is pushing rates up and it’s driven by higher inflation expectations, which relate back to the oil price. And the fact that we’re heading into the fourth week of the war suggests that that stress is not going away anytime soon,” said Mr Padhraic Garvey, head of global rates and debt strategy at ING in New York.