Stocks fell sharply on Wednesday after the Federal Reserve reaffirmed its dedication to tamping down inflation.
Markets had been fickle all day, before settling in the red as investors digested the central bank’s quarter-point rate hike and looked for clues about the state of the banking sector meltdown.
Investors were heartened by the Fed’s strong hints that its aggressive pace of interest rate hikes would come to an end soon. Still, the central bank also warned that rate cuts aren’t coming this year.
“The Fed just hiked rates two weeks after the biggest bank failures since 2008. If they aren’t blinking now, there shouldn’t be any doubt about their commitment to tame inflation,” said Scott Duba, CIO at Prime Capital Investment Advisors.
A decline in regional bank stocks weighed markets down. The SPDR S&P Regional Banking ETF, which tracks small and midsized bank stocks, fell about 2.4%.
Investors continued to search for safer places to keep their cash. Gold futures rose, as did US oil benchmark West Texas Intermediate.
Wall Street is also watching for the Bank of England’s own interest rate decision, due Thursday.
Treasury yields fell after jumping earlier in the day.
The Dow fell about 532 points, or 1.6%.
The S&P 500 slipped about 1.7%.
The Nasdaq Composite declined 1.6%.