U.S. stocks fell on Wednesday as oil prices surged following an Iranian missile attack on American forces in the Middle East, with investors also bracing for the Federal Reserve's interest rate decision later in the day.
West Texas Intermediate crude jumped nearly 7% after Iran launched missiles at U.S. forces, complicating the Fed's rate calculus
Bloomberg / Getty Images
U.S. stocks fell on Wednesday as oil prices surged following an Iranian missile attack on American forces in the Middle East, with investors also bracing for the Federal Reserve's interest rate decision later in the day.
The Dow Jones Industrial Average lost about 410 points, or 0.8%, while the S&P 500 and the Nasdaq $NDAQ Composite each declined roughly 0.2%. West Texas Intermediate crude futures climbed 6.9% to $89.88 a barrel.
The equity decline followed a late Tuesday announcement from U.S. Central Command that Islamic Revolutionary Guard Corps forces had fired multiple ballistic missiles at American military personnel stationed in the Middle East in what the command described as a surprise attack. The missiles were intercepted, according to the Centcom social media post. President Donald Trump told a Fox News reporter that the U.S. would hit Iran "hard" in response.
Brent crude futures also rose, jumping more than 5%, according to The Wall Street Journal. The jump in oil prices threatens to add inflationary pressure at a delicate moment for monetary policy.
The Fed is broadly anticipated to keep its policy rate unchanged in the 3.5%-to-3.75% target range, with CME $CME Group's FedWatch tool showing about a 70% chance of a hold. Fed Chair Kevin Warsh is set to hold a press conference following the decision. A rate hike is not fully off the table — traders put that probability at just under 30%, according to The Wall Street Journal.
Julia Hermann, global market strategist at New York Life Investment Management, argued that investors have overweighted inflation risk while underestimating the economic damage that additional tightening could cause. "A more hawkish communication stance would likely test today's narrow market leadership more than the broader market," she said.
The iShares Semiconductor ETF slipped 0.4%, extending a rough stretch for the sector. Chip stocks had shed close to 7% since the start of the week, weighed down by mounting concern over the payoff from heavy artificial intelligence spending and the threat of intensifying Chinese competition.
SK Hynix posted strong earnings growth that nonetheless came in below what analysts had expected, pushing its Seoul-listed shares down 9.6% on the day; its U.S.-listed shares also fell 0.4%.
Procter & Gamble $PG shares declined more than 3% after the company's quarterly revenue came in below forecasts. Ford $F Motor gained 5% after topping earnings estimates and boosting its outlook for the full year.
Update, July 29, 2026: The Dow Jones Industrial Average dropped 750 points Wednesday morning, a steeper decline than the roughly 410-point loss previously reported. The average 30-year fixed mortgage rate climbed to 6.58% last week, its highest level in 11 months. (per CNN)
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