$100 Oil Triggers Market Chaos as Fed Outlook Darkens

Global stock markets have been hit by rising oil prices, which have climbed towards $100 per barrel. This has led to increased pressure on investors, who are now factoring in a prolonged escalation of the Middle East crisis.

The S&P 500 and Dow Jones indices fell for the second session in a row, while the Nasdaq managed to hold up better due to a surge in AI-related stocks following Astra's launch. However, this resilience is not expected to last, as the broader market is still grappling with the impact of higher oil prices.

The key issue now is how long the disruption will last and whether it will have a lasting effect on inflation expectations and the Federal Reserve's policy decisions. If crude stays above $100 per barrel, investors may start looking beyond backward-looking data towards energy pass-through and inflation expectations.

Traders are also concerned about the possibility of multiple hikes from the Fed, which would force the market to rethink its rate path and valuation backdrop. This uncertainty is making it harder for investors to price in an insurance hike against an oil-driven inflation scare.