US stocks tumble after latest big Fed rate hike

NEW YORK – Wall Street stocks fell sharply on Wednesday after the Federal Reserve enacted another three-quarter point interest rate hike and signalled more monetary tightening ahead as it combats inflation.

The Dow Jones Industrial Average finished down 1.7 per cent at 30,183.78.

The broad-based S&P 500 also shed 1.7 per cent to 3,789.93, while the tech-rich Nasdaq Composite Index declined 1.8 per cent to 11,220.19.

The US central bank announced its third consecutive interest rate increase of 0.75 percentage point, continuing the forceful action to tamp down inflation that has surged to the highest in 40 years.

The increase – the fifth one this year – takes the policy rate to 3.0-3.25 per cent.

Markets were expecting another big interest rate increase, but were caught off guard by the Fed’s outlook as far as the need for additional hikes.

“The higher-for-longer narrative kicked in,” Art Hogan, analyst of B. Riley Wealth Management, said of the market’s reaction to an announcement that was more “hawkish” than expected.

The latest Fed statement included interest rate projections for the end of 2023 and 2024 that are higher than the previous forecasts, signalling the US central bank now sees the need for a more prolonged monetary tightening cycle in light of inflation trends.

All 11 sectors of the S&P 500 fell, while virtually all members of the Dow index dropped.

An exception was Walmart, which advanced 0.9 per cent after it announced it would hire 40,000 workers for the upcoming holiday season, far fewer than last year as inflation pressures corporate profits.

Among individual companies, General Mills jumped 5.7 per cent after reporting better-than-expected quarterly profits. AFP