US stocks slip ahead of Fed announcement on interest rates

U.S. stocks slipped Wednesday as investors awaited the Federal Reserve's afternoon announcement on interest rates, while oil prices continued their march higher on Iran war disruptions.

The S&P 500 edged 0.2 percent lower, a day after falling from its latest all-time high. The Dow Jones Industrial Average lost 127 points, or 0.3 percent, and the Nasdaq composite fell 0.5 percent. Booking Holdings dropped 2.5 percent after warning that the Iran conflict is hurting international travel demand — a signal that the war's economic impact is spreading beyond energy markets.

Oil prices rose again Wednesday, extending gains driven by the near-closure of the Strait of Hormuz and the UAE's announcement that it's leaving OPEC. The dual shock to energy supply — a military conflict restricting shipping and a major producer exiting the cartel that manages output — has created sustained upward pressure on prices that shows no sign of easing.

The Fed announcement, expected at 2 p.m. ET, is the day's main event. Markets have priced in a near-certain hold on rates, but investors will scrutinize the statement and Chair Jerome Powell's press conference for any shift in language about inflation risks or the economic impact of the Iran war.

The tension between equity market optimism and energy market stress captures the current moment: stocks are near record highs, but the foundation is increasingly fragile. Any signal from the Fed that inflation is becoming more entrenched — or that the war's economic toll is worse than expected — could trigger a sharper selloff.

**What This Means For You:** The market is calm on the surface but nervous underneath. If you're invested, don't let near-record highs lull you into complacency — the Iran war and energy price shock are real headwinds that could reverse gains quickly. If you're sitting in cash, a pullback might create entry points, but wait for the Fed's language before committing. Volatility is your friend only if you're prepared for it.