US stocks dive 1.7% after Fed bumps rates 75 bp for 3rd time

ANKARA

Major indexes in the US stock market plummeted around 1.7% on Wednesday after the Federal Reserve raised its benchmark interest rate by 75 basis points for the third consecutive time.

The Dow declined 522 points, or 1.7%, to close at 30,183. The S&P 500 lost 66 points, or 1.71%, to 3,789.

The tech-heavy Nasdaq decreased 204 points, or 1.79%, to finish at 11,220.

The Fed also lowered its US economic growth forecast and raised its terminal rate, the peak spot where the federal funds rate is expected to climb before they are trimmed, above 4% for 2022 and 2023, according to its projections materials.

Chair Jerome Powell said the median for the year-end projections suggest another 125 basis points, or 100 basis points, of interest rate increases, but noted that the Fed officials did not vote on that decision during this meeting.

Powell said reducing the record-high inflation in the US will require a below-trend growth in the American economy for some time, and stressed that the central bank is moving its policy stance "purposefully" to a level that will be sufficiently restrictive to return inflation to its 2% goal.

He said higher interest rates, lower economic growth, and softening in labor market are all painful for the American public, but added that they are not as painful as failing to restore price stability.

After the Fed's key meeting and Powell's speech, the VIX volatility index, also known as the fear index, jumped 3.1% to 27.99. The 10-year US Treasury yield declined 1.6% to 3.514%.

The dollar index increased 1% to 111.31, near its highest level in 20 years, while the euro was down 1.25% to $0.9845 against the greenback.

Precious metals bounced back from their losses in recent days, with gold adding 0.5% to $1,673 and silver rising 1.5% to $19.56.

Oil prices were down as stronger greenback lowers demand. Global oil benchmark Brent crude was trading at $89.94 a barrel for a 0.75% loss. US benchmark West Texas Intermediate was around $83.09 – down 1%.