Stocks tumbled for a myriad of reasons Wednesday, but mostly because the bond market signaled the Federal Reserve could be falling behind in the inflation fight as the central bank chose to keep interest rates unchanged.
The Dow Jones Industrials fell hard, losing 1,152.46 points, or 2.2%, to 51,594.86.
The S&P 500 dipped 112.45 points, or 1.5% to 7,316.36.
The NASDAQ Composite flopped 433.97 points, or 1.7% to 24,442.94.
Chip stocks are under pressure this month amid growing anxiety over the return on massive artificial intelligence spending, as well as fears of greater competition from China.
Micron Technology and KLA each dropped around 10%. AMD shed 5.5%.
Oil prices extended their gains after President Donald Trump told a Fox News reporter that the U.S. will be hitting Iran “hard” in response to the surprise attacks. West Texas Intermediate crude futures advanced 6.9% to trade at $89.88 a barrel.
This comes after U.S. Central Command said in a social media post late Tuesday that Islamic Revolutionary Guard Corps forces launched “multiple ballistic missiles in an attempted surprise attack on U.S. forces based in the Middle East.” The missiles were successfully intercepted, Centcom said.
Investors are also looking ahead to the Fed’s policy decision and subsequent press conference with Chairman Kevin Warsh on Wednesday afternoon. Fed funds futures traders are pricing in a nearly 70% likelihood that the central bank holds rates steady at the current targe range of 3.5% to 3.75%.
Prices for the 10-year Treasury retreated, raising yields to 4.68% from Tuesday’s 4.60%. Treasury prices and yields move in opposite directions.
Oil prices recovered $5.66 to $84.92 U.S. a barrel.
Gold prices regrouped $18.30 to $4,057 U.S. an ounce.
