The Federal Reserve delivered what was widely expected - keeping interest rates unchanged at the conclusion of Chair Jerome Powell's final meeting. According to Dow Jones reports, markets had anticipated no change in policy, with focus shifting to Powell's commentary for clues on the policy outlook. The US Dollar Index rose for a second day on Wednesday and stayed near two-week highs around $99.00, supported by cautious trading ahead of the Federal Reserve meeting and a stalled US-Iran peace process. The Dow Jones Industrial Average declined more than 200 points, slipping 0.45% to around 48,919, as continued selling pressure kept the index below its previous close, with only a modest attempt at recovery seen during the session.
Oil prices experienced a dramatic surge, with Brent crude futures hitting $117.81 per barrel, the highest level since the fragile ceasefire between the US and Iran came into effect. As per Dow Jones reports, oil prices rose 7.6 percent on Wednesday, driven by media reports suggesting the US will extend its blockade of Iranian ports. The June Brent contract climbed for an eighth day to the highest level since March 31, with the July contract up 3.2% at $107.73. The surge comes as the Strait of Hormuz remains effectively closed, creating significant supply disruptions for global petroleum deliveries. U.S. oil inventories fell sharply last week, with crude stocks dropping by 6.2 million barrels - far exceeding expectations of a 231,000-barrel draw, according to the Energy Information Administration. West Texas Intermediate also surged 5.8% to $105.73 per barrel, reflecting the broader market anxiety over extended conflict.
In crypto markets, traders have already been fading aggressive Fed-cut bets for 2026 as U.S. unemployment fell to 4.3%, tempering the liquidity story for assets like Bitcoin and Ethereum. The crypto fear and greed index dropped from 12 to 10 in February as Iran's naval drills and brief closures of the strait raised energy-cost risks for Bitcoin miners and other energy-intensive players. Earlier in April, the crypto market added roughly 4.3% to push total capitalization above $2.6 trillion after signs that Iran might soften its stance in talks over the war and shipping restrictions, while Bitcoin rallied toward $74,800 on the day and around $430 million in short positions were liquidated. However, recent developments show the crypto market remains fragile as ceasefire negotiations stall and Iran turns the Strait of Hormuz into a $1-per-barrel bitcoin tollbooth during limited truces. Bitcoin has now slid toward $75,000 as the latest geopolitical tensions continue to weigh on risk assets.
The backdrop extends beyond the Fed, with 'there is still no good news regarding the Middle East conflict' and the Strait of Hormuz remains blocked, a combination that keeps traders wary of fresh shocks to oil and broader risk sentiment. Pepperstone recently noted that 'the Strait of Hormuz remains impassable' and that much of the market's recent relief has been built more on 'hope' than on 'expectation,' even as Brent and WTI crude briefly dipped back below $100 per barrel. The Wall Street Journal reported on Tuesday that Trump told aides to prepare for an extended blockade on Iran's ports, with the Strait of Hormuz nearing two months of closure and keeping oil prices nearly 50% above pre-war levels. Recent reports suggest President Donald Trump warned Tehran on Wednesday that it should 'get smart soon' and capitulate to Washington's demands for tight controls on its nuclear programme, as a US naval blockade turned the screws on Iran's economy. Oil executives were told in a meeting with President Trump that the US could extend its naval blockade of Iran for months more, with analysts warning that such a move would prompt Iran to maintain its own blockade of the Strait of Hormuz, leaving the vital oil shipping route at a near standstill.
Despite the Fed decision and geopolitical tensions, Amazon, Meta Platforms, Microsoft and Google-parent Alphabet are set to report after the closing bell, when investors will gauge how their AI bets are paying off. As per Dow Jones reports, AI doubts weigh on sentiment as a report said OpenAI missed internal targets for users and revenue, rekindling concerns over heavy AI spending by tech giants. Visa jumped 10% after delivering stronger results than analysts expected, with CEO Ryan McInerney saying consumer spending remained resilient in the quarter. However, Robinhood Markets fell 10.7% after missing first-quarter profit expectations, while Seagate Technology jumped 17.5% after issuing an upbeat fourth-quarter forecast. The market is pricing in at least one more rate cut by the end of this year, a stark contrast to the on-hold stance priced in during Powell's final meetings, with traders positioned for this dovish shift by looking at interest rate futures and options that profit from a continued decline in short-term rates.
