Stocks fell in choppy trading on Wednesday after the Federal Reserve raised interest rates by 75 basis points and predicted more significant rate increases in its battle to tame rising inflation.
The Dow Jones Industrial Average fell 522.45 points, or 1.7%, to close at 30,183.78 points. The S&P 500 fell 1.71% to 3789.93, and the Nasdaq Composite fell 1.79% to 11220.19.
The S&P ended Wednesday’s session down more than 10% in the last month and 21% from its 52-week high, while the Dow and Nasdaq finished more than 21% and 30% from their highs, respectively. Even before the interest rate decision, stocks were widening in a strong tightening drive by the Federal Reserve that could push the economy into recession.
Stocks were volatile as traders analyzed the interest rate decision and the latest comments from Powell’s press conference. At its highest, the Dow Jones Industrial Average rose more than 314 points.
The Fed raised interest rates by a widely expected 75 basis points and said it expects the so-called final interest rate to reach 4.6% to fight persistently high inflation in the US. This is the rate at which the central bank will end its tightening regime. The central bank has also indicated that it plans to stay strong, raising interest rates to 4.4% by next year.
“You can only steer the ship toward the storm for so long, but eventually there will come a time when you need to control the openings and with the third consecutive Fed hike of 75 basis points over the past four months, market participants should be looking at , chief investment analyst at Allianz Investment Management, “to cover up for weather the next storm.”
Treasury yields popped up in the news. The two-year interest rate, which hit its highest level since 2007, was around 4.1%. The 10-year rate jumped to about 3.6%.
All major S&P 500 segments ended the session in negative territory, leading to the downside with consumer discretion, telecom services and a slew of growth names. Travel and Leisure Stocks were also damaged Along with stocks of huge tech companies such as Apple, Amazon and Meta Platforms.
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