Interest rate hike likely as oil and inflation ding stocks

Brent crude traded above $104 a barrel this week as shipping slowed through the Strait of Hormuz amid tensions with Iran, and Wall Street responded by shedding value across the board: the Dow lost 848 points, the S&P 500 fell 62, and the Nasdaq dropped 173. The consumer price index rose 0.4% for the month with annual inflation at 3.4%, driven partly by airline fares up nearly 24% year-over-year and restaurant spending up 3.4%. The producer price index also rose 0.4%, with energy prices up 4.2%, the sharpest monthly jump since May.

Analysts expect the Federal Reserve to raise interest rates at its upcoming meeting, with some predicting a hike as large as 75 basis points, following a similar move by the European Central Bank. Consumer sentiment has already dipped, particularly among lower- and middle-income households, and small business owners surveyed by the NFIB cited inflation, supply chain disruption, and softening sales as ongoing concerns.

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