US stocks, bonds, and gold experienced a simultaneous decline on Wednesday as escalating Middle East tensions and hawkish signals from the Federal Reserve dampened market sentiment. The S&P 500 fell 1.4% to its lowest level since November, while the Dow Jones Industrial Average dropped 1.6% and the Nasdaq Composite declined 1.4%. Oil and gas were the only sectors to close higher.

Middle East conflicts intensified as Iran launched a significant missile attack, termed "True Promise 4," targeting US-associated oil and energy infrastructure in the region. This was described as a direct retaliation for earlier attacks on Iranian energy facilities. Iranian officials warned that further assaults could expand to include energy infrastructure of US and Israeli allies, potentially leading to complete destruction.

Previously, Iranian state television reported that upstream oil and gas facilities were hit for the first time in the conflict, with damage to parts of the South Pars gas field and the nearby Asaluyeh petroleum complex, leading to shutdowns of multiple facilities. Although the US government announced a Jones Act waiver to alleviate high oil prices, market response was limited. Goldman Sachs data indicated that crude transit through the Strait of Hormuz remains approximately 98% below pre-conflict levels, with refined products particularly affected.

WTI crude oil climbed from an intraday low of $91 to near $99 per barrel, while Brent crude surged 7%, approaching $110 per barrel.

Economic data also weighed on markets. US Producer Price Index (PPI) for February rose 3.4% year-over-year, with core PPI increasing 3.9% to a one-year high, exceeding expectations comprehensively. Christian Hoffmann of Thornburg Investment Management noted that persistent inflation, compounded by rising energy costs, limits the Federal Reserve's policy flexibility. He added that the deflationary impact of high oil prices through demand suppression has been underestimated, presenting both inflation risks and headwinds to economic growth.

The mortgage market showed signs of cooling, with US mortgage applications plunging 10.9% in the week ending March 13, following a 3.2% increase the previous week.

During late trading, the Federal Reserve maintained interest rates unchanged as expected, citing uncertainty from Middle East developments and raising inflation projections. The Federal Open Market Committee voted 11-1 to hold rates, with Governor Michelle Bowman dissenting in favor of a 25-basis-point cut. Fed Chair Jerome Powell emphasized a cautious stance, stating that rate cuts would not commence without clear signs of receding inflation. He acknowledged the Fed's challenging position, maintaining that current rates are moderately restrictive. According to Bloomberg data, traders now expect only about 15 basis points of rate cuts this year, a sharp reduction from over 62 basis points anticipated before the US-Iran conflict escalation.

David Russell of Tradestation observed that the Fed has clearly prioritized price stability, with dovish sentiments waning and stagflation concerns emerging.

Amid these combined pressures, all three major US stock indices declined, with most S&P 500 sectors falling except for energy. Approximately 420 S&P 500 components closed lower. Industrial stocks initially held up but plummeted following the Fed's statement, while consumer stocks faced pressure from rising rates and policy uncertainty. Memory chip stocks served as a relative safe haven.

Nomura's Charlie McElligott warned that a break below 6,600 on the S&P 500 could trigger accelerated declines due to lack of long Gamma support, with a concentration of short Gamma positions around 6,475 forming a downward "acceleration zone."

Goldman Sachs trading desk data indicated low overall activity levels, rated 3 out of 10, with severe book liquidity. The top of the order book showed only about $2.06 million, a 62% decrease from the 20-day average. ETF trading volume rose to 39% amid geopolitical news.

With rate cut expectations diminishing significantly, US Treasury yields climbed sharply. The 2-year yield increased 10 basis points to 3.775%, while the 10-year yield rose nearly 6.5 basis points. The US dollar strengthened 0.76%, returning to the 100 level, boosted by safe-haven demand from Middle East tensions and the Fed's hawkish stance. The Japanese yen depreciated nearly 0.6%, with the USD/JPY rate approaching 160.

Risk appetite plummeted, leading to selling in speculative cryptocurrencies. Bitcoin fell 4.6% to around $71,000, and Ethereum dropped 6%. Spot gold declined 3.6%, nearing support at $4,800 and hitting a one-month low, entering a technical correction with a over 10% pullback from recent highs. Spot silver decreased 4.9%.

Among US sector ETFs, Consumer Staples ETF fell over 2.4%, leading declines alongside Consumer Discretionary ETF. Micron Technology dropped nearly 6% following its earnings report. European markets closed 0.7% lower, with Prosus declining over 7.3% and Logitech falling about 6.1%. Germany's DAX index fell over 0.8%, while Italian bank stocks gained over 0.4%.

Brent crude futures settled up over 3.8% above $107. Natural gas prices also rose over 5%.