Good Morning Investors!!! Oil eased after Iraq restarted exports, but that relief came too late to head off a hotter-than-expected Producer Price Index (PPI) surprise before today’s Federal Reserve (Fed) decision. February PPI rose 0.7% month over month and 3.4% year over year, versus expectations for 0.3% and 2.9%. We’ll break down why bond yields and the Fed’s updated rate path may matter more than the headline decision to leave rates unchanged, what Delta’s strong demand and Lululemon’s softer outlook say about where consumers are still spending, and why Micron and even used-car retailers could provide the next clues on whether the economy remains resilient or is beginning to lose momentum.
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Key Market Drivers
Oil eases (a bit from highs) after export restart: As we noted yesterday, oil had already become a key market stress point. Overnight, Iraq resumed crude exports through Turkey’s Ceyhan port, with initial flows reported around 250,000 barrels per day, helping Brent pull back a hair to around $103 a barrel and West Texas Intermediate to about $95 early this morning. That relief helped lift Japan’s Nikkei 225 by more than 2% and pushed Europe’s STOXX 600 up about 0.5% in early trading. Investors cared because additional physical supply can ease inflation concerns faster than policy commentary. Airlines, freight firms, and chemical makers usually benefit first, while oil producers lose some of their tailwind if crude continues to cool. Watch whether Brent can hold below $100 and whether Iraqi flows continue to ramp up over the next 24 to 48 hours. 
S&P 500 1 Year Chart, March 18, 2026
The Fed takes center stage: Rate-cut expectations kept moving lower, and that caution got another push this morning after February PPI rose 0.7% month over month and 3.4% year over year, versus expectations for 0.3% and 2.9%. The Fed is still widely expected to leave rates at 3.50% to 3.75% today, but the inflation surprise raises the stakes around the dot plot and Powell’s tone because it gives officials less room to sound dovish. That shift happened because oil back above $100 has complicated the inflation outlook just as the Fed updates its own forecasts. The dot plot, which shows where officials think rates are headed, may matter more than the rate decision itself because a higher-for-longer path tends to weigh first on smaller-company stocks, homebuilders, and richly valued growth stocks. The next signal will be whether the dots still leave room for easing this year and how Jerome Powell discusses the oil shock this afternoon. Inflation expectations move higher: The oil move is also pushing up inflation expectations, or the market’s view of future inflation. One market gauge of near-term inflation expectations hit 3% for the first time since last October, and the five-year breakeven inflation rate, a market-based estimate of average inflation over the next five years, rose above 2.65%, its highest level in more than a year. One closely watched global fund-manager survey showed a net 45% expecting higher inflation over the next year, up from 9% a month ago. That matters because if investors conclude higher fuel costs will persist, bond yields can remain firm and valuations for future earnings usually come down, which tends to pressure the market’s more speculative areas first. A useful test will be whether the five-year breakeven stays above 2.6% after PPI and the Fed, or slips back if policymakers sound confident that this shock will fade. Travel looks strong, apparel looks soft: Tuesday’s clearest company signal came from travel. Delta rose about 7%, while United, American, Southwest, and Alaska gained 3% to 4% after carriers said spring demand remained strong enough to raise fares even though jet fuel has jumped more than 50% since late February. After the close, Lululemon moved in the opposite direction, guiding 2026 revenue of $11.35 billion to $11.50 billion versus $11.52 billion expected and earnings of $12.10 to $12.30 a share versus $12.58 expected, sending the stock down about 1.5% in extended trading. That split matters because the consumer is not moving as a single group. Experiences still look more resilient than some higher-ticket goods, and companies with pricing power can absorb cost shocks far better than brands facing softer demand and tariffs. The next test will be whether more travel and retail updates over the next 24 to 48 hours resemble Delta’s tone or Lululemon’s. |
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Used-Car Retailers and Marketplaces
Rather than revisiting the new-vehicle story, the more useful read this week may be the used-car market. The latest Kelley Blue Book data put the average new-vehicle transaction price at about $49,000 in February, which continues to push more shoppers toward pre-owned cars. That makes used-car retailers a useful indicator of the middle-income consumer. Used EVs are also becoming a more affordable entry point.
February data showed about 2.13 million used vehicles on dealer lots, or 42 days’ supply, with sales pace improving from a year ago. Tight inventory tends to support pricing, while additional inventory can lead to more markdowns. A similar squeeze is showing up in the UK, where buyer traffic is strong but mid-aged vehicle supply looks tight. Used EV sales also rose 21% in January.
CarMax (KMX):
CarMax is the biggest used-car retailer in the US, with more than 250 stores and its own financing arm. That scale matters, and its store network helps with sourcing and trade-ins when inventory gets tighter. An activist investor is now pushing incoming CEO Keith Barr to fix digital trade-ins, cut costs, and price cars more flexibly.
Carvana (CVNA):
Carvana is the online-first rival, built around national sourcing, home delivery, and reconditioning centers where cars get repaired before resale. When demand is strong, that model can scale quickly without waiting for shoppers to visit a lot. Its latest results showed record full-year units and revenue, but quarterly profit missed, and it announced a 5-for-1 stock split last week.
InvestorsGrow Takeaway:
Watch rates first, especially the 10-year Treasury yield, because borrowing costs can significantly affect monthly payments. Then watch inventory days’ supply and gross profit per vehicle, which indicate pricing power and margin health. The main risk is rising repair and preparation costs. If rates ease while inventory remains tight, used-car pricing could stay firmer than many expect.
Delta Air Lines (DAL)
Delta Air Lines is one of the largest airlines in the US. It sells seats, but it also generates meaningful revenue from premium upgrades, loyalty benefits, and credit-card partnerships. That mix matters because it gives Delta more than one way to grow revenue and support margins.
On Tuesday, Delta raised its first-quarter revenue outlook after saying consumer and corporate demand strengthened into March. Shares rose about 7% after the company said revenue should grow at a high-single-digit pace, up from its earlier 5% to 7% forecast.
DAL DCF Fair Value – March 18, 2026
Over the past year, DAL is up about 36%, but it still trades roughly 20% below its February 11 high of $76.39. That suggests investors appreciate the recovery while remaining cautious about airline stocks.
United and American Airlines are also seeing strong demand, but Delta has leaned more heavily into premium seating, international routes, and its loyalty program. Nearly 60% of Delta’s revenue now comes from premium products, loyalty, and other non-ticket sources, which gives it more room to protect profits when ticket demand softens. Its 2025 revenue of $63.4 billion topped American Airlines’ $54.6 billion.
The key number investors will focus on is Delta’s note that sales over the past week rose about 25% from a year ago. That matters because if customers keep booking even after fare increases, Delta has a better chance of absorbing higher fuel costs without materially damaging profits.
Next, watch April earnings, whether fare increases hold, and whether jet fuel prices ease. If demand from premium and corporate travelers remains firm, the fuel issue becomes more manageable. If bookings weaken, rising costs could become a much more direct pressure on earnings.
InvestorsGrow Takeaway:
Delta is trying to show that it is not just an airline, but also a premium travel and loyalty business. If that mix continues to work, stronger fares and steadier loyalty revenue can help offset higher fuel costs. The risk is straightforward: if oil remains elevated or demand cools, profits can contract quickly.
