Stocks fell on Wednesday, while Treasury yields surged, as investors grew uncertain over the path of monetary policy after several Federal Reserve officials indicated there could be a rate hike this year to tamp down on inflation.
The Dow Jones Industrials plummeted 506.51 points, or 1%, to close Wednesday at 51,493.16.
The S&P 500 index ditched 91.23 points, or 1.2%, to 7,420.12.
The NASDAQ withered 354.69 points, or 1.4%, to 26,021.66.
At the conclusion of the Fed’s two-day meeting, the first under new Chairman Kevin Warsh, the central bank left interest rates unchanged at a target range of 3.5% to 3.75%.
A number of Fed officials see rates increasing in 2026, according to the summary of economic projections. The fed funds rate’s median estimate for year-end now stands at 3.8%. That’s an increase from 3.4% in the prior projections from March, which suggests that the committee sees at least one rate hike as necessary in 2026.
Warsh revealed he abstained from submitting a projection, complicating the forecast.
The chairman also signaled changes to the Fed could soon be coming. He announced five task forces to tackle certain issues related to operations at the central bank and how they impact monetary policy decisions. Traders were unsure of what these Warsh changes would mean for the future direction of rates.
SpaceX traded down $9.98, or 5% to $191.82. The stock had been on fire since the rocket company’s initial public offering last week, which was priced at $135. In that short time, shares have risen around 40%, bolting the company’s valuation above that of Amazon’s.
Shares of Intel rose $4.05, or 3.5%, to $121.10 as part of a broader comeback among chip stocks. This comes on the heels of the company starting production of its most-advanced chip node known as 18A-P, a step that moves the company closer to securing a potential agreement to produce chips for Apple devices.
Alongside Intel, ASML advanced $63.94, or 3.5% to $1,867.83.
Prices for the 10-year Treasury were lower, boosting yields to 4.50% from Tuesday 4.43%. Treasury prices and yields move in opposite directions.
Oil prices recovered 11 cents to $76.16 U.S. a barrel.
Gold prices swooned $97.70 to $4,256.70 U.S. an ounce.
