U.S. stock markets experienced significant declines on Wednesday, with the Dow Jones Industrial Average plummeting more than 760 points to hit its lowest level this year. Investors remained focused on escalating tensions in the Middle East, following reports of Iranian strikes on a U.S. exclusive area at a Riyadh refinery, as well as attacks on U.S. military bases and Kurdish militia positions in Iraq.
The Federal Reserve announced it would keep interest rates unchanged. Chair Jerome Powell indicated that raising rates is not the baseline expectation for current policy, although officials had discussed the possibility. He emphasized that no options are off the table and future policy decisions will continue to depend on economic data.
**U.S. Stocks** At market close, the Dow fell 768.11 points, or 1.63%, to 46,225.15. The Nasdaq dropped 327.11 points, or 1.46%, to 22,152.42. The S&P 500 declined 91.39 points, or 1.36%, to 6,624.70. Among individual stocks, SanDisk (SNDK.US) rose over 4%, while Amazon (AMZN.US) fell 2.4%. Microsoft (MSFT.US) and Apple (AAPL.US) both dropped more than 1.5%. The Nasdaq Golden Dragon China Index closed down 2%, with Alibaba (BABA.US) declining over 1%, while Kingsoft Cloud Holdings (KC.US) gained 12%.
**European Markets** Germany's DAX30 index fell 215.94 points, or 0.91%, to 23,504.82. The UK's FTSE 100 dropped 102.45 points, or 0.98%, to 10,301.15. France's CAC40 edged down 4.61 points, or 0.06%, to 7,969.88. The Euro Stoxx 50 decreased 32.30 points, or 0.56%, to 5,736.95. Spain's IBEX35 rose 34.91 points, or 0.20%, to 17,282.01. Italy's FTSE MIB fell 167.04 points, or 0.37%, to 44,720.50.
**Asian Markets** Japan's Nikkei 225 index fell 2.87%, while South Korea's KOSPI index rose over 5%.
**Cryptocurrencies** Bitcoin fell over 4% to $71,322.74. Ethereum declined over 5% to $2,202.33.
**Crude Oil** NYMEX light crude oil for April delivery rose 11 cents, or 0.11%, to settle at $96.32 per barrel. Brent crude for May delivery increased $3.96, or 3.83%, to settle at $107.38 per barrel.
**U.S. Dollar Index** The U.S. dollar index, which measures the greenback against a basket of six major currencies, rose 0.52% to settle at 100.092. By the end of New York forex trading, one euro traded at $1.1516, down from $1.1542 the previous session. One pound traded at $1.3341, down from $1.3360. One dollar bought 159.41 Japanese yen, up from 159.00. It also traded at 0.7902 Swiss francs, up from 0.7847; 1.3701 Canadian dollars, up from 1.3697; and 9.3346 Swedish kronor, up from 9.2737.
**Metals** Precious metals saw sharp declines. Spot gold fell 3.69% to $4,818.71 per ounce. Spot silver settled at $75.338 per ounce.
**Macro News** The Federal Reserve held rates steady and maintained its expectation for only one interest rate cut in 2026. Officials projected rising inflation and stable unemployment, forecasting just one 0.25 percentage point cut by year-end without specifying timing. The Fed's statement noted that the impact of Middle East developments on the U.S. economy remains uncertain. New projections indicated policymakers still anticipate lowering rates this year and see inflation reaching 2.2% by the end of 2027, nearing the central bank's 2% target. No policymakers projected further rate hikes this year, though one official expects one hike by 2027.
Fed Chair Powell described stubborn services sector inflation, excluding housing, as "frustrating," noting a lack of progress. He acknowledged that tariffs have pushed goods inflation higher and stated the Fed faces a difficult balancing act between above-target inflation and a softening labor market.
Regarding leadership, Powell indicated he would remain as Chair if a successor is not confirmed by May 15, his term's end. He also stated he would not leave the Fed Board while a Justice Department investigation is ongoing. His decision impacts the potential for leadership changes at the Fed.
Economist Michael Pearce of Oxford Economics suggested markets may be misjudging the Fed's rate cut outlook, asserting that cuts remain firmly on the agenda. He noted that strong growth hasn't significantly tightened labor markets, supporting the case for easing.
**Samsung Electronics Strike Risk** A vote by over 66,000 Samsung Electronics union members showed 93.1% in favor of a strike. Barring major changes, a full-scale strike is planned from May 21 to June 7. Analysis suggests a large-scale strike could halve production at the Pyeongtaek semiconductor plant. A two-to-three week stoppage could cause losses between $3.4 billion and $6.8 billion. As Samsung is a key supplier of high-bandwidth memory (HBM4) for NVIDIA's (NVDA.US) AI platforms, a prolonged strike could disrupt deliveries to AI manufacturers and potentially drive up product prices.
**Individual Stock News** Tesla (TSLA.US) CEO Elon Musk is reportedly in settlement talks with the SEC over allegations he failed to timely disclose his Twitter stock purchases before making a takeover offer in April 2022. The talks aim to resolve the matter ahead of a potential SpaceX IPO. Regulations require disclosure within 10 days of acquiring a 5% stake, but Musk delayed disclosure by 21 days and filed an incorrect form.
In the defense sector, Google (GOOG.US, GOOGL.US) appears to be securing an advantage. While AI firm Anthropic faced disputes with the Pentagon over military AI applications, Google Cloud CEO Thomas Kurian met with defense officials, positioning Google as a stable, uncontroversial partner. Following the fallout, the Pentagon ended its deal with Anthropic and signed with OpenAI, which later modified terms due to internal and external backlash. Google, however, successfully expanded its collaboration, integrating AI systems into non-classified Defense Department networks.
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