The bottom line: It is Fed Decision Day. The Federal Reserve will announce its interest rate decision at 2:00 PM ET, with Chair Powell's press conference at 2:30 PM. The market prices a 99% probability of a hold at 3.50–3.75%, but the real action will be in the updated dot plot and the Fed's tone on the oil shock. Overnight, the Reserve Bank of Australia went against the grain and raised rates to 4.1% — the second hike this year. Brent crude is hovering around $103 per barrel this morning, with U.S. gas prices jumping another five cents to $3.84 and diesel topping $5 a gallon for just the second time ever. Despite the fuel pressure, airlines are thriving: Delta surged 6.6% and American Airlines raised guidance on strong travel demand. Meanwhile, a Bank of America fund manager survey showed investors piling into cash at the fastest pace since COVID and turning outright bearish for the first time since early 2024. If you have 30 seconds: the market will be watching Powell's every word on oil, inflation, and whether the next rate move is up or down.
Previous Close — Tuesday, March 17
U.S. stocks edged cautiously higher on Tuesday as investors positioned ahead of the Fed's rate decision. The S&P 500 rose 0.25% to 6,716, the Nasdaq added 0.47%, and the Dow ticked up 0.10%. Small caps outperformed modestly with the Russell 2000 up 0.63%. Oil was the story again — Brent crude surged 3.2% to $103.43, with U.S. diesel crossing $5 per gallon for only the second time in history. Gold touched $5,009. The 10-year Treasury yield slipped 2 basis points to 4.20%.
Overnight Developments
Australia Raises Rates — Again
The Reserve Bank of Australia raised its cash rate by 25 basis points to 4.10% on Tuesday, marking the second hike this year and defying global expectations that most central banks would be easing by now. The RBA cited persistent inflation exacerbated by higher energy costs from the Hormuz crisis. The move makes Australia an outlier among major economies and underscores how the oil shock is fracturing the global rate path.
Fed Decision at 2 PM ET — What to Watch
The FOMC is widely expected to hold rates at 3.50–3.75% this afternoon. The decision itself is a formality. What matters is the updated Summary of Economic Projections (dot plot) and Chair Powell's press conference at 2:30 PM.
Top Counterterrorism Official Resigns Over Iran War
Joe Kent, director of the National Counterterrorism Center, resigned Tuesday saying he could not "in good conscience" support the administration's war against Iran. "Iran posed no imminent threat to our nation," Kent said. The resignation is notable because Kent was a Trump appointee and Army veteran — his departure signals growing internal opposition to the conflict even within hawkish circles. President Trump called him "weak on security."
Israel Claims Kill on Iran's Security Chief
Israel said it killed Ali Larijani, Iran's top security chief, in an airstrike. If confirmed, this would be one of the most significant targeted killings of the conflict and could either accelerate negotiations or deepen Iran's resolve to keep the Strait of Hormuz closed.
Pakistan Strikes Kabul Hospital — 400 Killed
Afghanistan reported that Pakistan launched an airstrike on a drug rehabilitation hospital in Kabul on Monday, killing at least 400 people. The attack, which has been condemned internationally, adds another layer of geopolitical instability to the region and could complicate U.S. efforts to maintain diplomatic channels in Central and South Asia during the Iran conflict.
Oil & Energy: Diesel Breaks $5 as Shipping Chaos Deepens
Brent crude is hovering around $103 this morning after closing at $103.43 on Tuesday, up 3.2% on the day. Oman crude soared to a record $150 per barrel in overnight trading, reflecting the extreme stress on physical oil markets in the Middle East.
- U.S. gasoline: National average jumped 5 cents in a single day to $3.84 per gallon (AAA), up from $2.92 last month.
- U.S. diesel: Topped $5/gallon for just the second time ever, reflecting a spike in refining costs as the war disrupts key infrastructure.
- Shipping chaos: The Financial Times reports the Hormuz closure has turned container shipping into a "wild west," with the largest shipping companies invoking a 19th-century rule that lets them drop containers wherever works best.
- Dollar strength: The U.S. dollar is up 2% since the Iran strikes began, as investors flee to haven assets.
Airlines Defy Fuel Costs — Delta +6.6%, American Raises Guidance
In one of the more surprising developments, airline stocks rallied sharply on Tuesday despite surging fuel costs. Delta raised its revenue forecast to high-single-digit growth through March, up from previously predicted 5–7% growth. American Airlines boosted its guidance to more than 10% record year-over-year quarterly revenue growth, up from a prior forecast of 8.5%.
"When prices did spike, we saw a spike in demand," Alaska Airlines CEO Ben Minicucci said. "People got this initial, 'Wow, if this thing is going to go crazy, I better book my fare now before fares go up.'" Delta CEO Ed Bastian emphasized the K-shaped economy: "We live at the top end of that 'K' — the premium end. That group of folks wants to travel."
Investor Sentiment: Most Bearish Since COVID
A Bank of America fund manager survey released Tuesday showed investors piling into cash at the fastest pace since COVID and turning outright bearish for the first time since early 2024. The stock market euphoria that characterized the first two months of 2026 has faded dramatically as the Iran war enters its third week with no resolution in sight.
Commodity currency carry trades are seeing their best returns in years, according to Bloomberg. Brazil has stepped up bond market intervention as oil upends rate expectations. The divergence between "have" economies (commodity exporters) and "have-not" economies (commodity importers) is widening at the fastest pace since 2008.
Corporate News & Premarket Movers
| Company | Move | Detail |
|---|---|---|
| Delta (DAL) | +6.56% | Raised revenue guidance on strong March bookings; premium demand resilient |
| Tesla (TSLA) | +0.94% | LG confirms $4.3B battery deal for Megapack energy division; Samsung chipmaking plan |
| Mastercard (MA) | Announced | Acquiring stablecoin payments firm BVNK for up to $1.8B to secure crypto-payments future |
| lululemon (LULU) | Mixed | Beat Q4 earnings and revenue but issued weak guidance; proxy battle with founder Chip Wilson |
| Nvidia (NVDA) | Watching | Restarted manufacturing of Groq AI chips for China; received orders from Chinese customers |
| SoFi (SOFI) | Responding | Called Muddy Waters short report "factually inaccurate"; exploring legal action |
| Amazon (AMZN) | Announced | Launched 1-hour ($9.99) and 3-hour ($4.99) delivery in 2,000+ U.S. cities; AWS AI revenue target $600B by 2036 |
| OpenAI | Refocusing | Top executives want to cut "side quests" and focus on core coding/enterprise; Anthropic's Claude cited as "wake-up call" |
Tesla/LG Battery Deal Confirmed
LG Energy Solution confirmed a $4.3 billion deal to supply lithium iron phosphate (LFP) batteries to Tesla from a plant in Lansing, Michigan. The batteries are for Tesla's energy storage division, which sells Megapack and Megablock utility-scale systems. The deal creates a domestic supply chain that insulates Tesla from U.S. tariffs on Chinese LFP imports. Tesla's energy division grew sales 27% last year to $12.8 billion. LG shares rose 2.7% in Seoul. Separately, LG and General Motors announced plans to recall 700 laid-off workers and convert a Tennessee EV battery plant to LFP production.
Mastercard Goes All-In on Stablecoins
Mastercard agreed to acquire BVNK, a stablecoin payments infrastructure firm, for up to $1.8 billion. The deal is a direct response to the AI shopping agent threat — the Citrini doomsday report warns of a future where AI agents use stablecoins to bypass credit card interchange fees. Total stablecoin transaction volumes jumped 72% to $33 trillion in 2025. "Time to market does matter," Mastercard's chief product officer Jorn Lambert told Bloomberg.
Private Credit Warnings Intensify
Morgan Stanley warned that private credit defaults could swell to pandemic-era levels as AI threatens the previously "safe" software industry. Many private credit firms were heavily exposed to software companies, which are now struggling as AI offers cheaper alternatives. Default rates could reach 8%, and Blue Owl and BlackRock have both recently limited investor withdrawals from their private credit funds.
Deal Flow
- Victory Capital revised its $8.6B offer for Janus Henderson with more cash to compete against Trian/General Catalyst's $7.4B LBO.
- Jana Partners is pushing $1.8B theme park operator Six Flags to explore a sale.
- Credit Mutuel Arkea is acquiring SocGen's French retail custody business for $1.2 billion.
- Unilever is considering spinning off some or all of its foods business.
- Nebius Group plans to raise $3.75B in convertible debt for data center expansion following its $27B Meta deal.
- HSBC raised $2.5B in the first AT1 bond sale since the Iran strikes.
- Lycra filed Chapter 11 bankruptcy to cut $1.2B in debt.
- Capital Tankers raised $440M in a Norway IPO — crude tanker owners capitalizing on the shipping premium.
Global Markets
Asia-Pacific
- Australia (ASX 200): Under pressure after the surprise RBA rate hike to 4.1%.
- Japan: Nikkei mixed ahead of Thursday's BoJ decision (expected hold).
- South Korea: SK Hynix and Samsung lifted the Kospi as SK Group warned the memory chip crunch will last four more years.
- Hong Kong: China is clamping down on Hong Kong IPOs amid a historic boom.
- China: Nvidia confirmed it has received chip orders from Chinese customers and is preparing a version of its Groq AI chips for China.
Europe
- FTSE 100: 10,404 (+0.83%) on Tuesday. Trading cautiously this morning ahead of the Fed.
- EU M&A: The EU is weighing curbs on member states' ability to block cross-border mergers.
- ECB: Decides Thursday. The ECB is now pricing in a rate hike, effectively ending its cutting cycle, as the oil shock feeds European inflation.
Economic Data & Events Today
| Time (ET) | Event | Consensus |
|---|---|---|
| 8:30 AM | Housing Starts (Feb) | 1.38M |
| 8:30 AM | Building Permits (Feb) | 1.45M |
| 2:00 PM | FOMC Rate Decision | Hold 3.50–3.75% |
| 2:00 PM | Summary of Economic Projections (Dot Plot) | — |
| 2:30 PM | Powell Press Conference | — |
Earnings Today
- Micron Technology (MU) — Key memory chip read-through for AI demand; SK Group's warning on four-year chip crunch raises expectations.
- Tencent — China's tech giant reports; important gauge of Chinese consumer and gaming.
- Macy's — Department store bellwether for U.S. consumer health.
- General Mills — Food/consumer staples read-through amid inflation pressures.
Thursday Earnings Preview
Alibaba, Accenture, FedEx, and Darden Restaurants all report Thursday. FedEx is especially important as a gauge of global trade volumes amid the shipping disruption.
Crypto & Regulatory
- SEC declares most crypto assets are not securities — a landmark shift in regulatory posture under the new framework.
- CFTC issues clarity for non-custodial crypto wallet providers to facilitate trades.
- Arizona filed criminal charges against Kalshi, the prediction market platform, alleging it operates an illegal gambling business. This could be the "first of several" state-level actions.
- Polymarket controversy: A Times of Israel reporter revealed that prediction market bettors threatened and tried to bribe him into changing a story about an Iranian missile strike so they could win bets on a $14M+ market.
The AlphaEdge Take: What to Expect Today
Today is likely to be a two-act session. The morning will trade in a narrow range as everyone waits for 2 PM. The real volatility comes after the Fed statement and, crucially, during Powell's press conference.
The wild card is geopolitical. Any significant escalation or de-escalation in the Iran conflict between now and 2 PM could override the Fed narrative entirely. Watch oil and the VIX in the first hour for clues about institutional positioning.
Our lean: We think Scenario 2 is most likely. Powell will be deliberately ambiguous, acknowledging the oil shock without committing to a clear next move. The dot plot will quietly shift hawkish. The market will rally on relief that a hike isn't imminent, then give back some gains as traders parse the projections. The bigger move comes tomorrow as the Bank of England, ECB, and Bank of Japan all weigh in.