Stocks were lower Wednesday, giving up an earlier gain, 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 slid 0.53%, while the Nasdaq Composite dipped 0.57%.
Disney and Caterpillar led the Dow lower, falling about 2% each, on fears that the Fed may be going too far in raising rates. Materials, communication services and consumer discretionary were the worst performing sectors in the S&P 500, falling more than 1% each.
The Fed raised rates by 0.75 percentage point, or 75 basis points, as was widely expected. The Fed also said it expects its so-called terminal rate to reach 4.6% to fight persistently high U.S. inflation. That’s the rate the central bank will end its tightening regime.
At the same time, the Fed indicated that it plans to stay aggressive through the end of the year, hiking rates to 4.4% before 2022 is out.
Treasury yields popped on the news. The 2-year rate, which hit its highest level since 2007, last traded at around 4.1%. The 10-year rate jumped to about 3.6%.
Fed Chair Jerome Powell is slated to hold a news conference at 2:30 p.m. ET.
General Mills’ stock hit an all-time high following its latest earnings report. Defense stocks also rose as Russian President Vladimir Putin called for a partial military mobilization.
The S&P 500 is down more than 8% in the past one month, giving up most of a summer bounce, as traders begin to fear the Fed will raise rates too far and tip the economy into a recession. The benchmark is flat for the week heading into Wednesday’s decision.