Stocks fell in volatile trade on Wednesday after the Federal Reserve raised rates by 75 basis points and forecast more significant rate hikes in a fight to control rising inflation.
The Dow Jones industrial average closed down 522.45 points, or 1.7%, at 30,183.78. The S&P 500 fell 1.71% to 3,789.93, while the Nasdaq Composite fell 1.79% to 11,220.19.
The S&P ended Wednesday’s session down more than 10% over the past month and 21% off its 52-week high. Even before the rate decision, stocks had priced in the central bank’s aggressive tightening campaign, which could push the economy into recession.
Stocks were volatile as traders weighed the price decision and recent comments from Powell’s press conference. At its highest, the Dow rose over 314 points.
The central bank raised rates by a widely expected 75 basis points and said it expected to reach its terminal rate of 4.6% to combat persistently high US inflation. It is at that rate that the central bank will end its tightening regime. The central bank also indicated that it plans to be aggressive, raising rates to 4.4% by next year.
“You can only steer the ship into the storm for so long, but eventually there comes a time when you have to hold off the hatch and the Fed’s third consecutive 75 basis point hike in the last four months is what market participants should be looking at to weather the coming storm,” said Allianz Investment Management’s senior investment strategist. said expert Charlie Ripley.
Treasury returns are in the news. The 2-year rate rose to 4.1%, its highest level since 2007. The 10-year rate rose to about 3.6% at the day’s high.
All major S&P 500 sectors ended the session in negative territory, led by consumer discretionary, communications services, commodities and growth names. Travel and entertainment Stocks also took a hit With big tech stocks like Apple, Amazon and Meta Platforms.
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