US stocks turned lower on Wednesday after the Federal Reserve raised interest rates by 25 bps, as widely expected. The S&P 500 fell 1%, the Dow dropped 1.5%, and the Nasdaq 100 declined 0.5%. Median projections from FOMC members signaled expectations for one or two additional rate hikes this year, consistent with upward revisions to inflation and GDP growth forecasts, alongside projections for lower unemployment in the coming years.
At the same time, FOMC Chair Warsh struck a distinctly hawkish tone, emphasizing the priority of fighting inflation and reiterating that current readings remain elevated. This marked a shift from earlier remarks that had stressed tackling price pressures while downplaying the federal funds rate as the primary policy tool.
Credit-sensitive sectors sold off sharply, with Bank of America, Wells Fargo, and Citigroup each losing about 4%. AI-exposed hyperscalers also retreated, with Microsoft and Alphabet both falling more than 1%.
