US Stocks Dip as Fed Hikes Interest Rates for First Time in Three Years

US stocks dipped on Wednesday after the Federal Reserve increased interest rates for the first time in three years and hinted at further hikes to combat high inflation.

The S&P 500 fell 0.4% as the Dow Jones Industrial Average dropped 631 points, or 1.2%, and the Nasdaq composite remained nearly unchanged.

Despite initial gains after the Fed's decision, stock prices weakened later in the day as Chairman Kevin Warsh emphasized that inflation remains too high and the economy appears to be strengthening.

The median forecast from Fed officials expects the federal funds rate to reach 4.1% by year-end, up from its current range of 3.75-4% following Wednesday's increase.

Traders bet on a 38% probability that the Fed could hike rates to 4.25-4.50% by year-end, according to data from CME Group.