New York (CNN Business)Wall Street approved of President Joe Biden's intention to nominate Jerome Powell for a second term at the helm of the Federal Reserve. But the initial jolt in the stock market didn't last until the close.
The market opened in the green and kept rising. But half-way through the session the Nasdaq Composite (COMP) pared its gains and dipped into the red.
At the close, the S&P 500 (SPX) had also given up on its advances, which could have pushed the index to a new record high. The S&P closed 0.3% lower and the Nasdaq fell a whopping 1.3%, having had the most turbulent day of the major benchmarks.
The Dow (INDU) was the only index that finished higher, closing up a modest 0.1% -- not even 20 points.
Powell has steered the economy through the worst of the pandemic as Fed Chairman. The White House cited Powell's "steady leadership" amid the economic turbulence of the pandemic as a reason for the decision.
A second four-year term would mean more of the same from the central bank, which announced earlier this month a rollback of its pandemic-era stimulus measures. The Fed is expected to raise interest rates in the second half of 2022.
For investors, who have gotten used to Powell's Fed leadership after some initial growing pains, it means they know what to expect from the central bank in the years to come.
"This decision removes uncertainty," said ING chief international economist James Knightley in a note.
Biden will nominate Fed Governor Lael Brainard as Vice Chairman. Brainard had also been an option to take over from Powell. Had she been picked as Chairman, the market reaction may have been a bit more rocky — not least because her confirmation would have likely been more challenging compared with that of Powell.
Even so, the Powell confirmation as it stands may face its own hiccups. Senator Elizabeth Warren, for example, previously called Powell a "dangerous man to head up the Fed."
"Chair Powell and Governor Brainard have similar views on monetary policy," said analysts at Goldman Sachs, pointing at their view that the current high levels of inflation are likely temporary in the grand scheme of things even if they don't seem short-lived at the moment.
"Powell and Brainard have also emphasized that they consider a broad set of indicators to gauge progress on the Fed's broad and inclusive employment goal," the Goldman analysts said.
It's a short week on Wall Street where the exchange will be closed on Thursday for Thanksgiving and only open for a half session on Friday.
-- CNN's Kaitlan Collins and Betsy Klein contributed to this report.
