NEW YORK, Sept. 16 (Xinhua) -- U.S. stocks ended lower on Wednesday after the Federal Reserve raised interest rates for the first time in over three years and Fed Chairman Kevin Warsh signaled that inflation remains stubbornly high.
The Dow Jones Industrial Average dropped 631.21 points, or 1.21 percent, to 51,461.9. The S&P 500 sank 33.92 points, or 0.45 percent, to 7,551.81. The Nasdaq Composite Index slipped 3.15 points, or 0.01 percent, to 25,978.43.
Eight of the 11 primary S&P 500 sectors closed in negative territory, with energy and financials leading the laggards by falling 2.97 percent and 1.63 percent, respectively. Bucking the downward trend, technology and healthcare finished slightly higher, edging up 0.1 percent and 0.04 percent, respectively.
In a unanimous decision, the Federal Open Market Committee lifted the target range for the federal funds rate by 25 basis points to between 3.75 percent and 4 percent, marking its first rate increase since July 2023. Updated economic projections released alongside the decision indicated that policymakers anticipate another rate hike before the end of the year.
While equities initially weathered the widely expected move, markets tumbled during Warsh's post-meeting press conference, where Warsh reiterated that persistent inflation risks have not abated. "The plain fact is that inflation is too high, and has been for too long," Warsh said, adding that summer price readings failed to show meaningful improvement in underlying price pressures.
"Ordinarily the assumption is that if the Fed hikes, they don't move just once, and indeed their forecast table does have a further hike pencilled in," wrote analysts with international bank ING. "However, this time around we think it may end up being a one-off. While August's jobs number was a healthy 162,000, between January 2025 and July 2026 the monthly average increase was a measly 31k with hiring indicators suggesting a reversion to that far slower growth rate is likely."
Following Warsh's remarks, the 10-year U.S. Treasury note yield climbed back above the 5 percent threshold amid concerns that monetary policy remains behind the inflation curve.
Financial institutions bore the brunt of the sell-off, logging their steepest single-day decline since February. Bank of America and Wells Fargo each slid over 2.5 percent on fears that tighter credit conditions will curb loan growth and weigh on economic activity, while American Express and Goldman Sachs also ended lower.
Broader economic concerns were compounded by energy cost pressures, with U.S. retail diesel prices hitting 6 dollars per gallon amid ongoing supply constraints linked to overseas conflicts, while Brent crude for November delivery Wednesday lost 2.92 dollars, or 2.69 percent, to settle at 105.83 dollars a barrel on the London ICE Futures Exchange.
Stemming steeper losses for the tech-heavy Nasdaq, Intel gained ground following reports that the company is in discussions with SK Hynix to collaborate on semiconductor manufacturing in the United States.
