Share

Dow closes 500 points lower, Nasdaq sheds 3% as Fed Chair Powell signals intent to continue hiking rates

Pro Picks: Watch all of Wednesday's big stock calls on CNBC
VIDEO6:2406:24
Pro Picks: Watch all of Wednesday's big stock calls on CNBC

Stocks tumbled Wednesday after Federal Reserve Chair Jerome Powell said inflation was still too high and indicated that the central bank has more rate hiking ahead.

The Dow Jones Industrial Average slid 505.44 points, or 1.55%, to settle at 32,147.76. The S&P 500 dropped 2.5% to close at 3,759.69, while the Nasdaq Composite dove 3.36% to finish at 10,524.80.

The Fed implemented another 0.75 percentage point rate increase Wednesday afternoon, and Powell said in a press conference that its inflation fight was far from done.

"We still have some ways to go and incoming data since our last meeting suggests that the ultimate level of interest rates will be higher than previously expected," he said.

Powell added that it was "premature" to talk about pausing hikes.

"We have a ways to go," said the central bank chair.

Stocks initially rallied following the rate hike when the Fed's accompanying statement hinted at a possible policy change in the future. "In determining the pace of future increases in the target range, the Committee will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments," the statement read.

Loading chart...

But traders' hopes were dashed by Powell's still-tough talk on inflation.

"The tone of Fed Chair Jay Powell's comments was quite hawkish, which means the Fed still has a way to go to fight inflation, and the level of interest rates will be higher than previously expected," said Jack McIntyre, portfolio manager at Brandywine Global. "There were no hints of dovishness to indicate the Fed may be poised to pause."

Consumer discretionary and information technology stocks were among the worst performers of the day. Both S&P 500 sectors shed more than 3%. Amazon, Netflix and Meta Platforms tumbled nearly 5% each. Tesla and Salesforce fell 5.6% and 6.1%, respectively.

The Fed's rate decision came after the release of strong jobs data, with better-than-expected private payrolls data for October painting a resilient labor market. The JOLTS report Tuesday also conveyed a tight jobs market despite the Fed's aggressive tightening clip.

The Dow is coming off a record October, rallying nearly 14% for its best month since 1976. The S&P 500 and Nasdaq had gained about 8% and 3.9%, respectively, to snap a two-month losing streak. With Wednesday's losses, the 30-stock index is down more than 11.5%, while the S&P 500 and Nasdaq are off by 21.1% and 32.7%, respectively, year to date.

Lea la cobertura del mercado de hoy en español aquí.

Dow sinks 505.44 points, Nasdaq dives 3.36%

Stocks closed lower in a volatile trading session as the Federal Reserve delivered another 75 basis point rate hike and hinted at its intentions to continue hiking.

The Dow Jones Industrial Average slid 505.44 points, or 1.55%, to settle at 32,147.76. The S&P 500 dropped 2.5% to close at 3,759.69, while the Nasdaq Composite tumbled 3.36% to finish at 10,524.80.

— Samantha Subin

Tech stocks among biggest market losers

Tech stocks tumbled Wednesday, dragging down the Nasdaq Composite by roughly 3% after the Federal Reserve indicated it has more work to do.

The S&P 500's information technology sector shed 3.2%, while consumer discretionary tumbled 3.5%.

Laggards on the market included big technology stocks Apple, Alphabet and Microsoft, which slumped more than 3% each. Amazon, Netflix and Meta Platforms toppled more than 4% each, while Tesla and Salesforce shed 5.6% and 5.9%, respectively.

Beaten-up semiconductors Nvidia and Advanced Micro Devices also fell.

— Samantha Subin

Big volume surge as market sells off post Fed decision

Trading volume surged Wednesday after the Fed delivered its latest interest rate decision.

The widely followed SPDR S&P 500 ETF (SPY) — which tracks the benchmark index — traded about 100.3 million shares with roughly 20 minutes left in the session, topping its 30-day average volume of 100.23 million. At this rate, the SPY will close well above that average.

FactSet data showed that volume was fairly muted ahead of the decision, with the SPY trading just 34 million shares from 9:30 a.m. ET until 1:59 p.m. ET. From 2 p.m. to 2:59 p.m., volume surged to 72.49 million.

— Fred Imbert

Indexes down entering final 20 minutes of trading day

The major indexes remain down heading into the final 20 minutes of trading.

The Dow is down 1%, while the Nasdaq and S&P 500 have dropped 2.6% and 1.9%, respectively.

The 10-year treasury note added 4 basis points, sitting at 4.092%.

— Alex Harring

S&P 500, other indexes react with volatility during Powell press conference

The S&P 500 reacted to Fed chair Jerome Powell's press conference with all sectors sliding into negative territory after initially moving up after the statement.

The S&P 500 is down 1.2% as of 2:55 p.m.

The Dow and Nasdaq are also both down 0.5% and 1.5%, respectively.

— Alex Harring

Stocks fall as Powell says terminal interest rate will be higher than previously expected

In a briefing with reporters on Wednesday following a fourth consecutive 0.75 percentage point rate hike, Federal Reserve Chairman Jerome Powell said the central bank's ultimate target for increases in interest rates has gone up.

"We still have some ways to go and incoming data since our last meeting suggests that the ultimate level of interest rates will be higher than previously expected," he said.

Stocks slipped following the comment, which signals that interest rates will continue to march higher and likely stay at a higher level than expected for longer as the Fed tames inflation. That reversed gains from earlier in the afternoon when traders digested the Fed statement as more dovish and hoped that rate hikes would be smaller in the future.

The Dow Jones Industrial Average was up about 60 points but pared gains. The S&P 500 also slumped from a post-rate hike spike and was up only 0.09%. The Nasdaq was slightly in the red.

—Carmen Reinicke

S&P 500 sectors move coming off Fed statement

The 11 sectors in the S&P 500 were trading up as investors found optimism in the latest statement from the Fed.

Utilities was performing the best, up 1.4%. Consumer discretionary added the least, up 0.1%.

Consumer discretionary and energy have both been trading near their respective flatlines following the statement, at points flashing red.

— Alex Harring

Dollar retreats after Fed statement

The dollar index fell to its lowest level since Friday following the release of the Federal Reserve statement.

The greenback has been bolstered this year by the Fed's rate hikes, and the latest Fed statement signaled that the central bank may slow rate increases going forward.

The dollar index was last at 110.73, down 0.7% for the session.

— Jesse Pound, Gina Francolla

10-year Treasury yield falls below 4%

Treasury yields dropped after the Fed signaled a possible slowdown in the pace of increases.

The yield on the 10-year Treasury traded 7 basis points lower to 3.97% after trading above 4% earlier in the day. The policy-sensitive 2-year Treasury yield fell 9 basis points to 4.44%

"'Cumulative tightening' and 'lagged impact' suggest that this will be the last 75 bp hike and in December the move will most likely be 50 bp," Ian Lyngen, BMO's head of U.S. rates, said in a note.

— Yun Li

Stocks leap following Fed's rate hike, central bank's statement hinting at possible policy change

Stocks wiped away their losses and turned positive after the Federal Reserve issued its fourth consecutive rate hike of 0.75 percentage point and hinted at a potential policy change. 

The S&P 500 rose by 0.65%, while the Nasdaq Composite gained nearly 0.4%. The Dow Jones Industrial Average jumped about 300 points.

In its latest statement, the Federal Reserve indicated it "will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments."

-Darla Mercado

Retail investors buying at summer highs, Vanda says

Retail investors have continued buying stocks over the past week, reaching a weekly high that matches levels seen in May and August, according to Vanda Research.

Marco Iachini, senior vice president, pointed to earnings as a main driver of activity, noting many of the favorite retail stocks saw sell-offs after releasing disappointing forward guidance. But Iachini said it was seen as a "buy-the-dip opportunity" as opposed to a capitulation.

Retail investors were purchasing U.S. securities at a rate of $1.5 billion per day as of Tuesday.

He also said investors typically chase momentum whenever risk rallies coming off periods of poor performance in an attempt to pare losses. He likened the action to "F.O.M.O.," or the fear of missing out.

Iachini said retail investors will be watching the Fed meeting for comments that could indicate future plans for interest rates as well as the next consumer price index data.

— Alex Harring

Why a Bernstein analyst disagrees with bulls on Tesla

Bernstein analyst Toni Sacconaghi says Tesla's stock has a downside of 34% because its software performance is not as strong as some believe.

An analysis found the company's software attributes about 1.3% of total company revenues. That amounts to about $290 million per quarter.

Sacconaghi is in the minority in calling Tesla an underperformer, as only 10% of analysts see it as that or a buy, according to FactSet. Meanwhile, 61% see it is a buy or overperformer and 29% a hold.

CNBC Pro