Stocks were lower on Wednesday, giving up earlier gains, after the Federal Reserve announced its latest monetary policy move.
The Dow Jones Industrial Average lost 176 points, or 0.58%. The S&P 500 is down 0.53%, while the Nasdaq Composite is down 0.57%.
Disney and Caterpillar led the Dow Jones Industrial Average down 2% each, on concerns that the Federal Reserve may go too far in raising interest rates. Materials, Communications Services and Consumer Estimation were the worst performers in the S&P 500, each down more than 1%.
The Fed raised interest rates by 0.75 percentage points, or 75 basis points, as widely expected. The Fed also 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.
At the same time, the Fed has indicated that it plans to stay aggressive through the end of the year, raising rates to 4.4% before the end of 2022.
Treasury yields popped up in the news. The two-year rate, which hit its highest level since 2007, was around 4.1%. The 10-year rate jumped to about 3.6%.
Federal Reserve Chairman Jerome Powell is scheduled to hold a press conference at 2:30 p.m. ET.
The S&P 500 has fallen more than 8% in the past month, giving up most of the summer’s rebound, as traders begin to fear that the Federal Reserve will raise interest rates too much and push the economy into recession. The index is flat for the week leading to Wednesday’s decision.
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