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Equities Mixed Following Fed Pause; Oil Gains

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-- US equities closed mixed Wednesday after the Federal Reserve kept interest rates steady at the end of what was likely Jerome Powell's last policy meeting as central bank chief.

The Dow Jones Industrial Average fell 0.6% to 48,861.8, while the Nasdaq Composite and the S&P 500 were little changed at 24,673.2 and 7,136, respectively. Most sectors ended in the red, led by utilities, while energy paced the gainers.

The central bank's Federal Open Market Committee left its policy rate unchanged as policymakers saw the Middle East conflict fueling uncertainty around the US economic outlook.

In a post-meeting press conference, Powell said he will stay on as a Fed governor for an indefinite period after his term as Fed chief expires on May 15. Earlier in the day, the US Senate Banking Committee voted to advance Kevin Warsh's nomination as Fed chair to the Republican-controlled Senate.

Fed Governor Stephen Miran dissented from the majority at the meeting, preferring to reduce rates by a quarter percentage point, the FOMC said. Cleveland Fed President Beth Hammack, Minneapolis Fed President Neel Kashkari and Dallas Fed President Lorie Logan supported the policy decision, but opposed including an easing bias in the statement.

There were only minor changes to the policy statement, but overall sentiment "leaned slightly hawkish, with several participants voting against maintaining the current easing bias," TD Economics said in a report.

"It seems very unlikely that a Warsh Fed will quickly pivot to lowering interest rates," TD Senior Economist Thomas Feltmate said in a note. "Decisions are made by a majority vote, and it's becoming clear that many participants are reluctant to take rates any lower amid a resilient economy and still elevated inflationary pressures."

Oil prices surged after President Donald Trump reportedly rejected an Iranian proposal to lift a US naval blockade. Brent crude was last up 7.5% at $119.62 per barrel, while West Texas Intermediate crude jumped 7.8% to $107.70.

Trump told Axios on Wednesday he will maintain the US naval blockade of Iranian ports until Tehran agrees to a nuclear deal. Iran wanted the Strait of Hormuz opened before the two sides could sit down to discuss uranium enrichment at a later stage.

In a social media post on Wednesday, Trump said Iran "better get smart soon."

"Crude oil has resumed its war-driven rally, with Brent rising almost non-stop since a brief mid-month tumble to ($86 per barrel), when hopes for a peace deal and a short-lived reopening of the Strait of Hormuz triggered a sharp but temporary correction," Saxo Bank Head of Commodity Strategy Ole Hansen said in a report Wednesday.

US Treasury yields were higher, with the 10-year rate up 6.4 basis points at 4.42% and the two-year rate rising 9.1 basis points to 3.94%.

In company news, Visa (V) shares jumped 8.3%, the biggest gain on the Dow, after the payments giant lifted its full-year growth outlook and reported better-than-expected fiscal second-quarter results.

NXP Semiconductors (NXPI) shares surged nearly 26%, the best performer on the S&P 500, after the company reported fiscal first-quarter results late Tuesday.

Brown-Forman (BF.A, BF.B) class B shares slumped 10%, among the steepest declines on the S&P 500. The company said late Tuesday that it and Pernod Ricard terminated discussions regarding a potential business combination.

Gold fell 1% at $4,560.50 per troy ounce, while silver dropped 1.5% to $72.14 per ounce.

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