By Anietie anii-bassey
U.S. stocks edged lower Wednesday as investors adopted a cautious stance ahead of a closely watched interest rate decision from the Federal Reserve, while surging oil prices tied to geopolitical tensions with Iran continued to weigh on sentiment.
The S&P 500 declined 0.3% in midday trading, extending losses from the previous session after retreating from a record high. The Dow Jones Industrial Average dropped 299 points, or 0.6%, while the Nasdaq Composite fell 0.4%, pressured in part by weakness in technology and artificial intelligence shares.
Despite the broader pullback, a steady stream of stronger-than-expected corporate earnings has provided some support to the market. Visa surged 9.1% after reporting quarterly results that exceeded analysts’ forecasts, with Chief Executive Ryan McInerney noting that consumer spending remained resilient. Starbucks also posted solid gains of 8.5% after reporting better-than-anticipated earnings, citing higher spending per customer, particularly across its North American locations.
So far this earnings season, a majority of companies have topped expectations, helping fuel the market’s climb to record levels in recent weeks. That resilience has come despite rising fuel costs and weakening consumer confidence linked to the ongoing conflict involving Iran.
However, companies that failed to meet projections faced sharp sell-offs. GE HealthCare Technologies dropped 11.8% after missing analysts’ estimates, while Robinhood Markets tumbled 14% as its profit growth fell short of expectations.
Shares of Booking Holdings fluctuated between gains and losses after the travel giant warned that the conflict with Iran is beginning to dent demand. The company, which operates platforms such as Booking.com and Priceline, said geopolitical instability has discouraged some travelers and could continue to disrupt bookings through June. It also cautioned that key travel corridors, particularly routes linking Europe and Asia, may face prolonged uncertainty.
Energy markets remain the clearest reflection of the geopolitical strain. Brent crude prices surged sharply again Wednesday, with June contracts rising 7.3% to $119.38 per barrel. July contracts, which account for a larger share of trading volume, climbed 6.5% to $111.21. Prices are now approaching their peak levels since the conflict began and stand well above the roughly $70 per barrel seen beforehand.
The sustained increase in oil prices has been driven by supply disruptions in the Persian Gulf, where shipping remains constrained. A ceasefire between the United States and Iran remains in place, but tensions persist, including the closure of the Strait of Hormuz by Iran and a U.S. blockade affecting Iranian shipping. These developments have effectively trapped oil tankers in the region, tightening global supply and keeping prices elevated.
Rising energy costs are a key factor shaping expectations for monetary policy. Investors widely believe the Federal Reserve will keep its benchmark interest rate unchanged, as policymakers remain wary that cutting rates too soon could reignite inflation pressures already fueled by expensive oil.
Attention is also focused on Jerome Powell, who is widely expected to preside over what could be his final meeting as chair. Market participants are watching closely for any संकेत about his future role at the central bank, particularly after facing criticism from Donald Trump over the pace of rate cuts.
In the bond market, the yield on the 10-year U.S. Treasury rose to 4.40% from 4.36% late Tuesday, reflecting expectations that borrowing costs may remain elevated for longer.
Meanwhile, technology stocks—especially those tied to artificial intelligence—remained under pressure ahead of key earnings reports due after the market close. Investors are increasingly scrutinizing whether massive investments in AI infrastructure are translating into meaningful returns.
Shares of Broadcom slipped 0.6% following a sharp decline in the previous session, while Nvidia fell 1.7%. Market heavyweights including Alphabet, Amazon, Meta Platforms and Microsoft are set to report results that could offer crucial insight into the profitability of ongoing AI spending.
Global markets showed mixed performance. European indexes moved lower, tracking the cautious mood on Wall Street, while Asian markets ended mostly higher. Hong Kong’s Hang Seng Index stood out with a gain of 1.7%, marking one of the stronger performances worldwide for the day.
As the Federal Reserve prepares to deliver its policy decision, investors remain caught between encouraging corporate performance and mounting external risks, with oil prices and geopolitical tensions continuing to cast a long shadow over the global economic outlook.
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