The major domestic equity indexes were lower on Wednesday as possible military action against Syria stoked investor concerns about geopolitical risk to the American economy. At the same time, the minutes of March’s Federal Open Market Committee sparked worries about a more hawkish view on interest-rate increases.

The decline followed two days of gains, driven by easing concerns about trade tensions between the United States and China.

On Wednesday, Trump warned Russia of imminent military action in Syria, declaring missiles “will be coming.”

The rising tensions sent oil prices surging, sending energy stocks higher, with the sectors index up one percent. However, t the risk-off sentiment weighed on Treasury yields, pushing the index of financial stocks down 1.3 percent.

The major Wall Street indexes edged even lower after minutes from the Federal Open Market Committee showed concern among a few of its members that rising inflation might require a faster pace of interest rate hikes than anticipated.

Members of the Federal Reserve voted unanimously to raise borrowing costs by a quarter percentage point and expressed confidence that the economy would strengthen, and inflation would rise in coming months.

Wall Street is hoping that earnings season will provide a sustained rise to stock prices. JPMorgan Chase, Citigroup and Wells Fargo will report quarterly results on Friday.

The consensus on the Street is that quarterly earnings for S&P 500 companies will chalk up a gain of 18.5 percent when compared to the same period a year ago. It that happens, it would be the largest gain in seven years, according to Thomson Reuters I/B/E/S.

Industrial distributor Fastenal fell 6.2 percent after its earnings missed expectations. The stock was the worst decliner on the S&P, followed by industry peer WW Grainger’s 4.4 percent decline.

Approximately 6.04 billion shares changed hands on the major domestic equity exchanges, as compared to the 7.29 billion share average for the past 20 trading days.

CPI Down for First Time In 10 Months

Consumer prices fell for the first time in 10 months during March, weighed down by a decline in the cost of gasoline, but underlying inflation continued to firm amid rising prices for healthcare and rental accommodation. The decline is likely temporary because

producer prices increased solidly in March.

According to a report by the Labor Department released Wednesday morning, the Consumer Price Index (CPI) was down 0.1 percent last month, the first and largest decline since May 2017, after rising 0.2 percent in February.

In the 12 months through March, the CPI increased 2.4 percent. It was the largest annual gain in a year and followed February’s 2.2 percent increase. Annual inflation is rising as the big price declines from last year drop from the calculation.

Excluding the volatile food and energy components, the CPI climbed 0.2 percent, matching February’s increase.

The so-called core CPI rose 2.1 percent year-on-year in March, the largest advance since February 2017, after increasing 1.8 percent in February. The annual core CPI also accelerated as the drag from last year’s plunge in prices for cellphone service plans dropped out of the calculation.

The core CPI is now well above the 1.8 percent annual average increase over the past 10 years. Economists polled by Reuters had forecast the CPI unchanged in March and the core CPI rising 0.2 percent from the prior month.

The Fed tracks a different index, the personal consumption expenditures price index (PCE) excluding food and energy, which has consistently run below the central bank’s 2 percent target since mid-2012.

Last year’s low prices for cellphone service plans are also expected to fall out of the calculation for March PCE price index data, which is scheduled for release on April 30.

This factor was also highlighted in minutes of the Fed’s March 20-21 policy meeting published on Wednesday. According to the minutes, “several participants noted that the 12-month PCE price inflation rate would likely shift upward when the March data are released because the effects of the outsized decline in the prices of cell phone service plans in March of last year will drop out of that calculation.”

Inflation is expected to get a boost from a $1.5 trillion income tax cut package and increased government spending, as well as a weakening U.S. dollar.

Gasoline prices tumbled 4.9 percent in March, the largest drop since last May, after falling 0.9 percent in February. Food prices edged up 0.1 percent after being unchanged in February.

The core CPI was lifted by rising rents and healthcare costs. Owners’ equivalent rent of primary residence, which is what a homeowner would pay to rent or receive from renting a home, increased 0.3 percent last month after climbing 0.2 percent in February.

Healthcare costs rose by 0.4 percent, with prices for hospital care jumping 0.6 percent and the cost of doctor visits rising 0.2 percent. Healthcare costs increased 2.0 percent year-on-year, below the 2.9 percent average annual rate over the past 10 years.

Apparel prices fell 0.6 percent after two straight months of robust gains. There were also declines in the cost of telecommunication, used cars and trucks, tobacco and education. Prices for new motor vehicles and recreation were unchanged last month.

Fed Not Surprised by Rising Economic Activity and Inflation

According to the minutes of the March 20-21 meeting released today, all of the Federal Reserve’s policymakers felt that the economy would firm further and that inflation would rise in the coming months.

The readout of the meeting, at which the Fed unanimously voted to raise borrowing costs by a quarter percentage point, also showed that policymakers were wary about the impact of the Trump administration’s trade and fiscal policies.

“All participants agreed that the outlook for the economy beyond the current quarter had strengthened in recent months,” the Fed said in the minutes. “In addition, all participants expected inflation on a 12-month basis to move up in coming months.”

The Fed’s target range for its benchmark lending rate is currently between 1.50 and 1.75 percent. The increase in March was the sixth rise since the central bank began a tightening cycle back in December 2015.

As the economy has strengthened, the Fed has upped the pace of hikes. It sees another two rate rises this year, although quarterly forecasts at the last meeting showed more officials than in December were supportive of three more hikes in 2018.

The Fed’s preferred measure of inflation currently sits at 1.6 percent and has undershot its 2 percent target rate for six years, but various indicators have recently pointed to an uptick in price pressures.

Policymakers also see additional impetus from an economy in which the labor market is tightening, the dollar weakening and the stimulus from a $1.5 trillion income tax cut package and increased government spending yet to impact on the economy.

Earlier on Wednesday, one of the Fed’s key measures of consumer prices, the so-called core CPI, rose 2.1 percent year-on-year in March, the largest advance since February 2017, after increasing 1.8 percent in February.

Fed Chairman Jerome Powell said last Friday that the Fed would likely need to keep raising rates to keep inflation under control, but also pledged to stick to a gradual path.

Several committee members indicated the outlook for the economy and inflation could lead to a slightly steeper path of rate increases over the next few years.

Some suggested that at a given point the Fed might have to change its statement language to acknowledge monetary policy would have to move to a neutral or “restraining factor” for economic activity, while there were also thoughts expressed that

interest rates would rise above the Fed’s longer-run estimate for a time.

One potential headache for Fed officials remains threats of tit-for-tat tariffs worth tens of billions of dollars between the Trump administration and China, which if implemented could damage growth and raise consumer prices. Those tensions have roiled financial markets over potential damage to global growth.

In the minutes, Fed policymakers showed concern about this as well as uncertainty about the implication of Trump’s stimulus on fiscal sustainability and real interest rates.

“A strong majority of participants viewed the prospect of retaliatory trade actions by other countries, as well as other issues and uncertainties associated with trade policies, as downside risks for the U.S. economy,” the minutes read.

Since the March meeting, Fed officials have largely adopted a wait-and-see attitude to trade policy, noting it is not yet clear if the tariffs will go into effect and their eventual size if implemented.

The Fed is expected to keep rates unchanged at its next policy meeting on May 1-2, but investors overwhelmingly see another rate increase at the following one in mid-June.