Wednesday’s session was defined by escalation. The Dow fell 280 points to close at 48,861.81, its fifth consecutive losing day, as Brent crude surged nearly 7% to $118.80 per barrel after President Trump formally rejected Iran’s Hormuz reopening proposal and told aides to prepare for an extended blockade. In what was almost certainly Jerome Powell’s final meeting as Fed chair, the FOMC held rates 8-4 — the most divided vote since October 1992. After the bell, the picture shifted sharply: Alphabet surged 7% and Amazon gained 4% on cloud beats, while Meta fell 6% on a user miss and a capex hike to as much as $145 billion. European stocks closed broadly lower ahead of the Fed decision, dragged by surging energy costs and oil-price risk to the growth outlook.
U.S. Markets: Dow’s 5-Day Losing Streak, Oil Dominates
The S&P 500 essentially flatlined, inching down just 0.04% to 7,135.95. The Nasdaq ticked up a fractional 0.04% to 24,673.24 — a near-standstill as investors positioned ahead of the biggest earnings night of the year. The Dow’s 0.57% drop to 48,861.81 extended its losing run to five sessions, its longest streak since January. The Russell 2000 extended its recent underperformance.
The dominant force was oil. WTI crude jumped 7.17% to settle at $107.16 per barrel. Brent gained 6.78% to $118.80 — within reach of $120 again. The move was triggered by two reports arriving in quick succession: first, the Wall Street Journal reported that Trump had told aides to prepare for an extended Iranian blockade; then Axios confirmed Trump had outright rejected Iran’s Hormuz proposal, saying the naval blockade stays until Tehran agrees to a nuclear deal. “They are choking like a stuffed pig,” Trump told Axios. After weeks of diplomatic ambiguity, the message was unambiguous: Hormuz stays closed.
Bright spots within the session: Seagate Technology jumped more than 11% in regular hours, building on Tuesday’s after-hours surge, after its earnings beat and positive guidance impressed analysts. NXP Semiconductors added more than 25% on the same catalyst. Brinker International (Chili’s parent) rose ~13% on a strong earnings beat and guidance raise. On the negative side, GE HealthCare Technologies tumbled 12% after cutting its full-year earnings outlook. Regeneron slid nearly 6%. Booking Holdings fell ~4.5% — it beat Q1 estimates but cut full-year guidance, citing “lagging impacts from the Middle East conflict through the end of June.”
The Pershing Square IPO (Bill Ackman’s $5B offering) debuted to disappointment. Closed-end fund PSUS opened at $42 vs. its $50 IPO price and closed down ~18%.
The Fed: 8-4 Hold, Powell Stays On — And What That Means
The FOMC voted to hold the federal funds rate at 3.5%–3.75% — the third consecutive hold and a result that was 100% priced in. What was not priced in was the scale of dissent: four officials voted against the statement’s language, marking the first time four FOMC members dissented since October 1992.
Governor Stephen Miran dissented in favor of a rate cut. Cleveland Fed President Beth Hammack, Minneapolis Fed President Neel Kashkari, and Dallas Fed President Lorie Logan dissented in the opposite direction — objecting to the statement’s “easing bias” phrase. All three have warned that inflation remains too elevated to signal future cuts. The FOMC statement itself acknowledged: “Inflation is elevated, in part reflecting the recent increase in global energy prices.”
The 10-year Treasury yield jumped more than 5 basis points to 4.43% immediately after the decision — a signal that markets took the hawkish dissents seriously. Markets are currently pricing in no rate changes for the rest of 2026 and well into 2027.
Powell confirmed he will stay on the Board of Governors after his chairmanship ends May 15, pending the completion of an investigation into Fed headquarters renovations. This matters for rate policy: it means Trump-aligned governors will hold only three of seven board seats — not a majority — making it harder for incoming Chair Kevin Warsh to push through cuts even if he wants to. The Senate Banking Committee advanced Warsh’s nomination along party lines the same day.
After-Hours: The Scoreboard That Matters More
Four of the Magnificent Seven reported after Wednesday’s close. The net read is cautiously positive, with one significant miss:
- Alphabet: +7% after-hours — Revenue $109.9B vs. $107.2B expected (+20% YoY, highest growth rate since 2022). Google Cloud: $20.02B vs. $18.05B estimated — up 63% YoY. Cloud backlog: $460 billion. Full-year capex guidance raised to $180–190B. CEO Sundar Pichai: “We are compute constrained in the near term. Our cloud revenue would have been higher if we were able to meet the demand.”
- Amazon: +4% after-hours — EPS $2.78 vs. $1.64 expected; Revenue $181.52B vs. $177.30B expected. AWS: $37.59B (+28% YoY) vs. $36.64B estimated — fastest growth in more than three years. Q2 guidance: $194–199B (vs. $188.9B expected).
- Microsoft: little changed after-hours — EPS $4.27 vs. $4.06 expected; Revenue $82.89B vs. $81.39B expected. Azure revenue: +40% YoY. Raised 2026 capex guidance to $190B (vs. $154.6B consensus), citing a $25B impact from higher memory prices. Q4 revenue guidance midpoint ($87.25B) came in slightly below the $87.53B consensus — a mild headwind.
- Meta: −6% after-hours — EPS $7.31 vs. $6.79 expected; Revenue $56.31B vs. $55.45B expected. But daily active people (DAP) fell to 3.56B — a 5%+ drop from Q4, missing the 3.62B estimate. Meta cited “internet disruptions in Iran” and WhatsApp restrictions in Russia. Capex for the year raised to $125–145B (from $115–135B). Q2 revenue guide in-line ($58–61B). Net income included an $8B tax benefit from Trump’s tax bill; ex-benefit, EPS was significantly lower.
The combined capex from these four hyperscalers — Microsoft $190B, Amazon ~$200B, Alphabet $180–190B, Meta $125–145B — implies roughly $700 billion in AI infrastructure spending in 2026 alone. S&P 500 futures added 0.3% post-earnings, Nasdaq futures +0.5%.
European Markets: Broad Losses, Energy Costs in Focus
European stocks closed lower across the board on Wednesday, pressured by rising oil prices and uncertainty about the Fed’s policy direction ahead of the decision:
- STOXX Europe 600: 602.96 (−0.60%)
- CAC 40 (Paris): 8,072.13 (−0.39%)
- DAX (Frankfurt): 23,954.56 (−0.27%)
- FTSE 100 (London): 10,213.11 (−1.16%) — the sharpest decline among major indices
- FTSE MIB (Milan): 47,796.03 (−0.51%)
- IBEX 35 (Madrid): 17,642.80 (−0.74%)
The FTSE 100’s outsized drop reflected the pound’s strength and the index’s sensitivity to global risk appetite — energy and mining stocks, which had been supporting London, came under profit-taking pressure as investors reassessed the Hormuz impasse. With Brent above $118, the inflation risk for European economies — which import nearly all their oil — moved to the front of the agenda ahead of Thursday’s ECB and Bank of England meetings.
The yield curve in the UK steepened slightly: the 10-year gilt yield came in at 5.058%. German Bund yields edged up to 3.116%. Both the ECB and BOE are expected to hold rates Thursday, but the market’s attention will be on whether either central bank explicitly links the oil-driven inflation surge to a possible rate hike later in 2026.
What’s Next: Thursday’s Super-Day
Thursday April 30 is the single most data-intensive day of the month:
- US Q1 GDP (advance estimate) — consensus ~+1.5% annualized. Any negative print would be the first contraction in three years and would force a reassessment of the “high inflation + weak growth” scenario for the Fed.
- Core PCE (March) — Powell pre-announced core PCE at ~3.2%. This is the Fed’s preferred inflation gauge and will set the tone for rate expectations heading into May.
- Apple earnings — the last of the Magnificent Seven to report. Analysts are watching for any tariff or supply-chain commentary on China manufacturing, and whether iPhone demand has held up amid the Iran-driven consumer inflation pressure.
- ECB decision (Frankfurt) — hold expected; statement language on energy-driven inflation is the key signal.
- Bank of England decision (London) — hold expected; any indication of renewed hike risk would hit UK equities and the pound.
- Iran-US diplomacy — Trump’s rejection of the Hormuz proposal is now official. The question is whether Tehran escalates further or returns to the table with new terms. Any update will move Brent immediately.
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