US stocks fell on Wednesday as oil prices continued to rally amid a US blockade of Iranian ports and after the Federal Reserve left key interest rates unchanged. Traders were also expecting quarterly results from four companies from the “Magnificent Seven”.
The S&P 500 traded down 0.3%, as did the Nasdaq Composite. The Dow Jones Industrial Average lost 364 points, or 0.8%, led by losses from Boeing and Goldman Sachs.
Oil prices rose another day on Wednesday after The Wall Street Journal, citing US officials, reported that President Donald Trump had told aides to prepare for an extended blockade of Iran. Prices then rose after Axios reported that Trump rejected Iran’s proposal to reopen the Strait of Hormuz and said the US naval blockade would remain in place until a deal was reached to address concerns over the Middle Eastern country’s nuclear program.
U.S. West Texas Intermediate crude futures rose 7% to trade above $106 a barrel. International benchmark Brent crude oil prices rose 6% to trade above $118 a barrel.
Higher oil prices “will increase overall inflation” in the near term, Powell said during a news conference after the end of the Fed’s policy meeting in April, where the Federal Open Market Committee (FOMC) voted 8-4 to keep rates in a range of 3.5% to 3.75%. This marked the first four FOMC members to dissent since October 1992. To be sure, members expressed different reasons for their vote.
The meeting is likely to be Powell’s last at the helm before his term as president ends in May. Kevin Warsh, Trump’s nominated successor, appears to be on track to take over Powell’s post at the central bank, SEEbiz reports. The market did not expect the Fed to make any adjustments to the current federal funds rate.
Later on Wednesday, the four “Magnificent Seven” tech titans are scheduled to report earnings after the close of business: Alphabet, Amazon, Meta Platforms and Microsoft. Investors have high expectations that these firms will show revenue that will justify the capital they have invested in AI investments.
