Dow Drops Over 400 Points as Federal Reserve Raises Interest Rates
The Dow Jones Industrial Average fell more than 400 points on Wednesday following the Federal Reserve's decision to raise interest rates for the first time since July 2023. The rate hike, by 25 basis points, pushed the federal funds rate target range up to 3.75%–4%. Fed Chair Kevin Warsh cited persistent inflation as a key reason behind the move. The S&P 500 also declined slightly while the Nasdaq Composite remained relatively stable. The Federal Open Market Committee voted unanimously in favor of the increase, and officials signaled that another hike could occur this year. Despite market expectations having largely priced in the decision, bank and financial stocks were among those most affected by the drop. The Fed raised its inflation forecasts for both headline PCE (to 3.7%) and core PCE (to 3.4%), with no expectation of reaching the 2% target until 2029.
Topics: Federal Reserve inflation interest rates stock market reaction