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The stock market slumped on Wednesday after minutes of the Federal Reserve’s last meeting showed the central bank could become more aggressive in removing incentives and reducing its balance sheet in an attempt to fight high inflation.

Important facts

The Dow Jones Industrial Average fell 1.1% to nearly 400 points, while the S&P 500 fell 1.9% and the Nasdaq Composite fell 3.3%.

Stocks fell from their daily highs as investors reviewed minutes of the Federal Reserve’s monetary policy meeting last month – with the central bank already announcing it would curb bond purchases through March and raise interest rates shortly thereafter.

In the last few minutes, the US Federal Reserve signaled that, depending on how the economic recovery progressed, it could be even more aggressive in removing incentives and raising interest rates over the course of the year.

Investors were particularly shocked by the fact that Fed officials largely agreed that it would be appropriate to begin reducing the central bank’s balance sheet by nearly $ 9 trillion some time after the initial rate hike.

Strong salary data initially boosted markets earlier in the day after ADP’s December employment report found 807,000 new jobs were created in the past month – well above the 375,000 economists had expected.

Chip maker and software company stocks led the falls on Tuesday: Salesforce fell nearly 8%, Adobe 7%, Nvidia 6%, and Advanced Micro Devices 6%.