U.S. stocks were mixed in Wednesday's late trading session. The Federal Reserve held interest rates steady, but internal disagreements reached their highest level since 1992. Chair Jerome Powell stated he would remain on the Board of Governors. Reports suggest the U.S. is preparing to extend its blockade of Iranian ports, pushing oil prices higher. Markets are also focused on quarterly earnings reports from four of the so-called "Magnificent Seven" companies.
The Dow Jones Industrial Average fell 265.53 points, or 0.54%, to close at 48,876.40. The Nasdaq Composite edged up 7.06 points, or 0.03%, to finish at 24,670.86. The S&P 500 declined 4.00 points, or 0.06%, settling at 7,134.80.
The Federal Reserve decided on Wednesday to maintain the benchmark interest rate in the range of 3.50%-3.75%. Meeting minutes revealed that while rates were held steady, the level of internal dissent among policymakers was the highest seen since 1992.
The decision to keep the key rate unchanged came amid unusually significant divisions within the Fed. Policymakers are grappling with the impact of persistent inflation on monetary policy while awaiting an upcoming leadership transition at the central bank.
This meeting was potentially the last chaired by Jerome Powell as Chair. The rate-setting Federal Open Market Committee (FOMC) voted to maintain the benchmark funds rate in the 3.5%-3.75% range. Markets had fully priced in the likelihood of no change.
While the committee was widely expected to routinely vote for maintaining the rate, the actual FOMC vote was 8-4, with officials providing differing justifications for their votes. The last time four FOMC members dissented was in October 1992.
Governor Stephen Milan, who has consistently dissented since joining the Fed in September 2025, again voted for a 25-basis-point rate cut.
The three other dissenting votes came from Cleveland Fed President Beth Hammack, Minneapolis Fed President Neel Kashkari, and Dallas Fed President Lorie Logan. They expressed agreement with holding rates steady but "did not support including an easing bias in the current statement."
In a subsequent press conference, Chair Powell stated that he would continue to serve on the Board of Governors for an indefinite period during the investigation into the renovation project of the central bank's headquarters building.
"I have said that I will not leave the Board until this investigation is truly concluded, transparency is achieved, and there is a final outcome. I stand by that. I am encouraged by recent developments and am closely watching the next steps in this process," Powell said at the start of the post-meeting press conference.
"Decisions on these matters will continue to be based entirely on what I believe is in the best interests of this institution and those we serve. I will continue to serve as a Fed Governor after my term as Chair ends on May 15th, for a duration to be determined," he added.
Oil prices surged more than 6% on Wednesday after the U.S. President stated that the maritime blockade on Iran would continue until it agrees to a nuclear deal.
By 12:10 PM Eastern Time, the international benchmark Brent crude futures were up over 6%, to $118.33 per barrel. U.S. West Texas Intermediate crude futures also rose over 6%, to $106.37 per barrel.
"A blockade is more effective than bombing," the President told Axios on Wednesday. "They are choking like a stuffed pig, and it will get worse. They cannot have nuclear weapons."
Recent attempts at negotiation to end the conflict have stalled. Iran has refused to reopen the Strait of Hormuz unless the U.S. lifts the blockade. Tehran's control of the strait has hindered oil exports from the Middle East.
Prior to this, U.S. officials revealed on Wednesday that the President had instructed aides to prepare for an extension of the blockade on Iran.
Energy market participants are also assessing the impact of the UAE's sudden decision to exit OPEC, though analysts suggest the move's effect on the market may be limited given the ongoing crisis in the Middle East.
Strategists at ING noted in a research report released Wednesday that the UAE's departure from the oil producers' group is "a significant blow" to OPEC and would certainly be welcomed by the U.S. administration "as it weakens OPEC's influence in the oil market and should also benefit importers and consumers."
"However, in the near term, the biggest driver for oil prices remains developments in the Persian Gulf and the timeline for the resumption of oil shipments through the Strait of Hormuz," they added.
After the market close on Wednesday, four tech giants from the "Magnificent Seven"—Alphabet (Google's parent company), Amazon, Meta Platforms, and Microsoft—were scheduled to report earnings. Investor expectations are high, with hopes that these reports will justify the companies' substantial investments in artificial intelligence.
"While the market broadly expects these major tech companies to report earnings beats on Wednesday, the focus is entirely on their forward guidance, including growth trajectories and future investment pace. Each company faces its own dynamics, but delivering tangible results from high capital expenditure remains the key test," said Chris Brigati, Chief Investment Officer at Southwest Business Corporation (SWBC).
During Tuesday's trading session, tech stocks were a weak spot following reports that OpenAI recently failed to meet its own revenue and user growth targets. However, on Wednesday, Seagate Technology and NXP Semiconductors saw their shares surge more than 15% and 19%, respectively, after reporting better-than-expected earnings and positive revenue guidance.
Comments