US Stocks Plummet as Fed Decision Fuels Inflation Fears

US stocks took a sharp downturn on Wednesday as investors digested the Federal Reserve's decision to keep interest rates steady. The Dow Jones Industrial Average plummeted 1,153.18 points, or 2.19%, to close at 51,594.14, marking its largest one-day decline since April 2025.

The S&P 500 and Nasdaq Composite also suffered significant losses, falling 1.52% and 1.74% respectively. The VIX index, often referred to as the 'fear index', surged 13.45% to 20.66 points, its highest level in around two months.

The Fed's decision was met with concerns that monetary policy remains insufficiently restrictive, with inflation worries exacerbated by a sharp increase in oil prices. US President Donald Trump's statement on hitting Iran 'hard' in response to attacks on American forces in the Middle East contributed to the spike in crude prices, which rose over 6% to settle at $84.46 per barrel.

Meanwhile, semiconductor shares continued their recent losses, with Micron Technology and KLA each falling around 10%, while Advanced Micro Devices lost 5.5%. The pan-European Stoxx Europe 600 index also ended the day in negative territory, with France's CAC 40 dropping 0.6% to 8,408.27.