The stock market moved lower on Wednesday after the Federal Reserve said it would “soon” start raising interest rates from March to combat a decade-long rise in inflation and concerns about a broader stock market sell-off in January to disperse.
The Dow Jones Industrial Average fell 0.4%, over 100 points, while the S&P 500 lost 0.2% and the Nasdaq Composite was flat.
Stocks jumped to their daily highs for the first time — the S&P 500 rose as much as 2% — after the Federal Reserve announced it plans to raise interest rates three times this year, beginning in March.
Although stocks rose shortly after the Fed’s announcement, they turned negative as investors were alarmed by a separate statement from the central bank about “shrinking” its massive balance sheet following the rate hike.
US Treasury yields soared – also putting pressure on equities – after Fed Chair Jerome Powell said in a press briefing that there was “quite a lot of room” to hike interest rates further before the job market is hurt take.
The Fed also confirmed that it will end its pandemic-era asset purchases by March as it seeks further monetary tightening amid the US economy’s recent “progress”.
Microsoft shares, meanwhile, rose nearly 5% after a strong earnings report helped boost markets and bring some much-needed relief to battered tech stocks, which rallied on Wednesday.