US stocks tumble after latest big Fed rate hike

Agence France-Presse

Posted at Sep 22 2022 08:41 AM

The US Federal Reserve in Washington DC, USA, 21 September 2022. The Fed announced a third consecutive interest rate hike following its meeting later in the day. EPA-EFE/JIM LO SCALZO
The US Federal Reserve in Washington DC, USA, 21 September 2022. The Fed announced a third consecutive interest rate hike following its meeting later in the day. EPA-EFE/JIM LO SCALZO

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

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

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

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, signaling 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 percent 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 percent after reporting better-than-expected quarterly profits.

RELATED VIDEO:

Watch more News on iWantTFC