LIVE MARKETS-Stocks drop as interest rate cut hopes fade

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STOCKS DROP AS INTEREST RATE CUT HOPES FADE

Stocks fell Thursday as surging oil prices from the escalating U.S.-Israel war on Iran dimmed hopes for Federal Reserve rate cuts this year.

Fed policymakers on Wednesday repeated expectations for one rate cut in 2026 but forecast higher inflation while Fed Chair Jerome Powell said the monetary path was subject to unusually high uncertainty.

An oil price spike to as high as $119 a barrel on Thursday compounded fears that higher inflation will keep the U.S. central bank on hold for longer, though prices were down from their peak by the close.

Fed funds futures pricing shows that traders see a cut as unlikely until at least mid-2027.

The Dow Jones Industrial Average .DJI was the worst performing major index, down 0.44%, with the S&P 500 .SPX and Nasdaq Composite .IXIC also ending the day modestly red.

Materials .SPLRCM, down 1.6%, were the worst performing S&P 500 sector, while energy, up 1.5%, was the only sector to log significant gains.

Here is Thursday’s closing market snapshot:

(Karen Brettell)

EARLIER ON LIVE MARKETS:

IRAN WAR COULD IGNITE NEW AGRICULTURAL BULL CYCLE CLICK HERE

FEAR GAUGES ARE FLASHING EXTREMES AND HISTORY SAYS THAT'S BULLISH - CARSON GROUP CLICK HERE

FED RATE CUT AND HIKE ARE EQUALLY UNLIKELY - BNP CLICK HERE

WINTER'S BONE: LOWEST JOBLESS CLAIMS THIS YEAR, WEAKEST NEW HOME SALES SINCE 2022, (AND MORE) CLICK HERE

STOCKS DROP AS OIL GAINS, IRAN WAR INTENSIFIES CLICK HERE

POST-FED ROUT SENDS DOW BELOW KEY LONG-TERM MOVING AVERAGE; 45,000 SUPPORT ZONE EYED CLICK HERE

SOCIETE GENERALE'S CURRENCY RECOMMENDATION STRAITJACKET CLICK HERE

CITI: ENERGY STOCKS AREN’T JUST ABOUT THE OIL PRICE CLICK HERE

90% OF THE STOXX IN THE RED CLICK HERE

BEFORE THE BELL: EUROPEAN FUTURES TUMBLE AS ECB, BOE LOOM CLICK HERE

CENTRAL BANKERS SOUND INFLATION ALARM CLICK HERE