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

The US stock market closed lower on Wednesday after the Federal Reserve announced its first interest rate hike in three years. The Dow Jones Industrial Average dropped by 1.21% to 52,462.55, while the S&P 500 shed 0.45% to 7,551.81 and the Nasdaq Composite saw a slight decline of 0.01% at 25,978.42.

The market initially traded slightly higher as investors priced in a quarter-point hike, but turned south during Federal Reserve Chair Kevin Warsh's press conference. He emphasized that inflation risks have not improved, stating 'The plain fact is that inflation is too high, and has been for too long [... ] This summer's inflation readings do not tell me that underlying trends have meaningfully improved.'

Energy markets remained in focus as US diesel hit $6 a gallon for the first time due to supply strains linked to the Ukraine and Iran conflicts. Crude oil prices traded lower but held above $100 a barrel.