Fed Hike Stings US Stocks as Inflation Concerns Persist
US stocks experienced a decline after the Federal Reserve raised interest rates for the first time in three years and hinted at further increases to combat high inflation.
The S&P 500 fell by 0.4%, while the Dow Jones Industrial Average dropped 631 points, or 1.2%. The Nasdaq composite remained nearly unchanged, with a slight edge down of less than 0.1%.
Fed Chairman Kevin Warsh emphasized that inflation remains too high and the US economy appears to be strengthening, suggesting more rate hikes may be necessary.
The median Fed official expects the federal funds rate to end this year at 4.1%, up from its current range of 3.75% to 4%. Traders, however, are betting on a 38% probability that the Fed could hike rates to a range of 4.25% to 4.50% by the end of the year.