Wall Street closed lower on Wednesday as surging crude oil prices and a sharply divided Federal Reserve meeting combined to sap investor confidence ahead of major technology earnings. The Fed left its policy rate unchanged at the end of what market participants expect to be the final meeting under Chair Jerome Powell, but the policy statement flagged an unusually wide split among policymakers.
Energy markets were a dominant influence on trading. Crude climbed following confirmation that President Donald Trump instructed officials to prepare for a prolonged blockade of Iranian ports, a move that could constrain shipments through the Strait of Hormuz and sustain supply pressures. "Today oil prices are pretty much leading the movement in the market because it does not appear as if were going to be getting any kind of a quick resolution to the closure of the Strait of Hormuz," said Sam Stovall, chief investment strategist at CFRA Research in New York.
A White House official said Trump met with senior representatives from Chevron and other energy companies to discuss possible measures to stabilize oil markets if restrictions on Iranian port traffic persist for months. The prospect of longer-lasting supply constraints pushed energy prices higher and rekindled worries about broader inflationary pressure, even as the Fed held its key interest rate steady.
Market attention also turned to earnings season. Investors were bracing for after-hours reports from four members of the so-called Magnificent Seven group of AI-focused megacap companies: Amazon, Alphabet, Meta Platforms and Microsoft. The Philadelphia SE Semiconductor index rose 1.5% on the day and has gained 43.8% so far this year. "The real question is not just whether they hit those estimates, but if whatever guidance they can offer would continue to be encouraging for these companies and for AI in particular," Stovall added.
On the economic front, core capital goods orders - a proxy for corporate capital expenditure plans - jumped 3.3% in March, marking the largest monthly increase since June 2020. That data point added a layer of complexity to the inflation and monetary policy outlook.
Major index moves were pronounced. The Dow Jones Industrial Average fell 369.09 points, or 0.75%, to close at 48,772.84. The S&P 500 declined 21.78 points, or 0.31%, to 7,117.02, while the Nasdaq Composite dropped 89.82 points, or 0.36%, to finish at 24,574.33.
Among S&P 500 sectors, energy was the top performer, benefitting directly from the jump in crude prices. Materials and healthcare were the weakest sectors on the day.
Several individual stocks moved sharply. Robinhood Markets fell 14.5% after missing first-quarter profit expectations. Data storage names rallied after Seagate Technology issued a positive fourth-quarter outlook: Seagate jumped 10.1%, and peers SanDisk and Western Digital rose between 7.1% and 7.4%. NXP Semiconductors surged 26.6% after providing second-quarter revenue and outlooks above Wall Street estimates.
Consumer and payments names also posted notable gains. Starbucks advanced 9.1% after raising its full-year profit forecast, and Visa climbed 9% after increasing its full-year earnings forecast.
Market breadth was negative. On the New York Stock Exchange, decliners outnumbered advancers by a 2.62-to-1 ratio, with 154 new highs and 66 new lows recorded. On the Nasdaq, 1,277 stocks rose while 3,461 fell, producing a 2.71-to-1 ratio of declining issues to advancers. The S&P 500 registered 20 new 52-week highs and 23 new lows, and the Nasdaq Composite logged 71 new highs and 113 new lows.
Summary and near-term considerations:
- Oil-led market moves and a divided Fed statement combined to pressure equity performance.
- High-profile tech earnings are set to provide fresh directional cues, with guidance expected to drive sentiment as much as results.
- Economic data showing a strong monthly rebound in core capital goods orders complicates the inflation and policy narrative.