US Stocks Slide After Fed Hikes Interest Rates Amid Inflation Concerns

US stocks slid after the Federal Reserve raised interest rates for the first time in three years. The decision aims to curb inflation, which has consistently exceeded the Fed's target of 2%. The S&P 500 dropped 0.4%, while the Dow Jones Industrial Average fell 631 points (1.2%) and the Nasdaq composite was nearly unchanged.

The Fed's move was met with caution on Wall Street, as higher interest rates tend to slow economic growth and undercut stock prices. Bank stocks were among the market's sharpest losers, including Huntington Bancshares (-5.6%), Citizens Financial Group (-4.8%), and JPMorgan Chase (-1%).

Traders are betting on further rate hikes, with a 38% probability of the Fed increasing rates to a range of 4.25%-4.50% by year-end. This would be higher than the current median forecast of 4.1%. Fed Chairman Kevin Warsh emphasized that inflation remains too high and the US economy appears to be strengthening.

While some AI stocks, including Nvidia (+0.8%) and Advanced Micro Devices (+1.6%), helped limit market losses, overall the S&P 500 fell 33.92 points to 7,551.81, with the Dow Jones Industrial Average dropping 631.21 to 51,461.90.