Stocks Drop After Fed's Latest Rate Hike

Stocks dipped Wednesday after the Federal Reserve announced its latest hike to interest rates but said it’s not sure what may come next. The S&P 500 fell 28.83, or 0.7%, to 4,090.75. The Dow Jones Industrial Average lost 270.29, or 0.8%, to 33,414.24, and the Nasdaq composite slipped 55.18, or 0.5%, to 12,025.33. The Fed’s move to raise its benchmark interest rate by another quarter of a percentage point was widely expected, and it’s supposed to slow the economy further in hopes of getting inflation under control. The hope on Wall Street is that this is the final increase following the Fed's fastest flurry in decades.

The central bank gave a nod toward the possibility in its statement, where it dropped a reference saying it "anticipates that some additional policy firming may be appropriate.” But the Fed stopped short of declaring the end to rate hikes, which have already caused cracks in the US banking system, sent stock prices well below their record heights and pushed many investors to expect a recession later this year, the AP reports. Powell also said that even though traders are hoping for cuts to rates later this year, which can act like steroids for markets, he doesn't expect them to happen that quickly. The Fed's next meeting is next month.

The banking system has felt some of the fiercest pressure from all the Fed's rate hikes. Shares of PacWest Bancorp, Western Alliance Bancorp, and other rivals fell again following the Fed's decision, a day after seeing trading of their stocks get halted amid steep slides. PacWest sank 2% after being up earlier in the day. Western Alliance fell 4.4%. On the opposite end was Eli Lilly, which rose 6.7% after reporting encouraging results from a study of a treatment for Alzheimer’s disease. Kraft Heinz rallied 2% after beating analysts’ forecasts for profit and revenue. Advanced Micro Devices fell 9.2% despite reporting stronger profit and revenue than expected. It gave a forecast for revenue in the current quarter that fell short of some analysts’ expectations. (More stock market stories.)