Dow sinks more than 500 points in whiplash trading session after Fed raises interest newshub

Dow sinks more than 500 points in whiplash trading session after Fed raises interest

US stocks were all over the place on Wednesday after the Federal Reserve hiked rates by 75 basis points.

The Dow, S&P 500, and Nasdaq 100 all closed sharply lower as the Fed signalled that more rate hikes were on the way.

“There is a strong clustering within the dot plots, showing all FOMC members are on board with this more hawkish narrative,” ING Economics said.

US stocks closed sharply lower in a whiplashed trading session on Wednesday after Federal Reserve Chairman Jerome Powell hiked interest rates by 75 basis points and signalled that more increases were imminent.

The new fed funds target rate is between 3.0% and 3.25%, and the Fed expects it to be just under 4.5% at year-end, according to the central bank’s so-called dot plot of forecasts. That suggests the Fed could hike interest rates by another 75 basis points at November’s FOMC meeting, followed by a 50-basis-point bump in December.

Additionally, comments from Powell’s press conference suggested a couple of 25-basis-point rate hikes were possible in early 2023, bringing the fed funds target rate closer to 5%.

“With inflation proving to be far stickier than imagined, the Fed repeated that activity needs to slow much more with the door left wide open for a fourth consecutive 75bp hike in November…it is important to note that there is a strong clustering within the dot-plots, showing all FOMC members are on board with this more hawkish narrative,” ING Economics said.

Here’s where US indexes stood at the 4:00 p.m. ET close on Wednesday: