The tech-heavy Nasdaq Composite dropped more than 2.2%, the benchmark S&P 500 traded almost 1.6% lower, and the blue-chip Dow Jones Industrial Average plunged 0.8%, or over 300 points
US stocks dropped on Wednesday following the Federal Reserve’s decision to hold interest rates steady and Chair Jerome Powell’s hint that the central bank would not begin cutting rates at its next meeting in March.
The tech-heavy Nasdaq Composite dropped more than 2.2% on Wednesday. The benchmark S&P 500 traded almost 1.6% lower after dropping marginally below its record high on Tuesday. The blue-chip Dow Jones Industrial Average, meanwhile, plunged 0.8%, or over 300 points.
The sharp move lower marked the worst single-day performance for the S&P 500 since September.
While expecting the Fed’s rate decision on Wednesday, Wall Street had been looking for signs as to when the Fed might cut rates. It got a couple of big ones: In its policy statement, the Fed noted it does not anticipate it will be appropriate to reduce interest rates until it has “greater confidence” inflation is dropping to 2%.
“I do not think it is likely that the committee will reach a level of confidence” by the March meeting, Powell said at a subsequent press conference.
Stocks had already had a rough start to the day after the first batch of results from tech giants largely failed to convince investors.
“Magnificent Seven” names Microsoft and Alphabet, along with chipmaker AMD, took centre stage on the earnings docket Tuesday. All three stocks were hit Wednesday, with a more than 7% decline with the Google parent leading the losses.
The poor start from the tech giants, which are expected to do much of the heavy lifting for the S&P 500 this earnings season, could unnerve Wall Street — at least until Apple, Amazon, and Meta get their turn on Thursday.
