Fed Vice Chair Janet Yellen was announced as Obama's pick to succeed Chairman Ben Bernanke, who has served for two terms as the leader of the central bank and will leave office at the end of the year.
Yellen's selection could not erase concerns that gridlock in Washington could throw the U.S. economy into default by allowing the government's borrowing authority to expire by mid-October.
On Wall Street, the Dow Jones industrial average added 26.45 points or 0.18 percent to close at 14,802.98. The Standard & Poor's 500 gained 0.95 points or 0.06 percent, to 1,656.40. The Nasdaq lost 17.06 points or 0.46 percent to 3,677.78.
On the New York Stock Exchange, 1,467 stocks advanced while 1,574 declined on volume of 3.5 billion shares traded.
The 10-year U.S. treasury note fell 7/32 to yield 2.666 percent.
In Japan, the Nikkei 225 index added 143.23 points, 1.03 percent, to 14,037.84.
In Britain, the London FTSE dropped 27.92 points or 0.44 percent to 6,337.91.
On currency markets, the euro rose to $1.352 and the dollar rose to 97.34 yen.
Crude oil shed $2.16 or 2.1 percent to $101.32 on the New York Mercantile Exchange. On the Comex division, gold lost $19.50 to $1,305.10 per troy ounce while silver shed 56.8 cents to $21.875.