Stocks Plummet as Federal Reserve Raises Interest Rate
The US stock market took a hit on Wednesday following the Federal Reserve's decision to raise its main interest rate for the first time in three years. The move is aimed at curbing high inflation, but higher rates typically slow economic growth and hurt stock prices.
According to AP reports, investors initially held onto modest gains after the Fed announced its decision, but losses mounted as Fed Chairman Kevin Warsh emphasized that inflation remains too high and the US economy appears strong enough to withstand more rate hikes.
The S&P 500 fell 33.92 points, or 0.4%, to 7,551.81, while the Dow Jones Industrial Average dropped 631.21 points, or 1.2%, to 51,461.90. The Nasdaq composite saw a smaller decline of 3.15 points, or less than 0.1%, to 25,978.42.
Bank stocks suffered some of the market's sharpest losses due to concerns over reduced demand for loans and narrower spreads between short-term interest rates and longer-term ones. Huntington Bancshares fell 5.6%, Citizens Financial Group sank 4.8%, and JPMorgan Chase slipped 1%.