Stocks tumbled on Wednesday as Federal Reserve policymakers said they expect to hike interest rates once this year.
The S&P 500 slid 1.21%, while the tech-heavy Nasdaq Composite declined further, 1.34%. The Dow Jones Industrial Average also fell by 0.97%.
The trading session was marked by the Federal Reserve's decision. Even though the Federal Open Market Committee (FOMC) maintained the federal funds rate in the 3.5%-3.75% range, in line with economists' expectations for the meeting, the fact that some policymakers believe a hike will be necessary this year sent stocks tumbling. New Fed chair Kevin Warsh said he abstained from giving a forecast.
CNBC detailed that the median projection now calls for the benchmark rate to stand at 3.8%, above the current target range and up from 3.4% in the March summary.
Treasury yields shot up following the development, with the 2-year one gaining 15 basis points and clocking in at 4.205%.
The Fed is under continued scrutiny over how it will react to inflationary pressures, most of which have stemmed from the war in Iran.
The latest figure available showed that inflation accelerated in May to its highest rate in three years, clocking in at 4.2%.
It was the first time since April 2023 that inflation climbed above 4%, CNBC noted. The monthly figure rose by a seasonally adjusted 0.5%. Both figures were in line with expectations.
The outlet added that, despite the headline increase, the so-called core CPI, which excludes more volatile components like food and energy, climbed 0.2% compared to April and 2.9% in an inter-annual basis.
Fed officials said they expect core inflation, which excludes more volatile components like food and energy, to remain at 2.5% through 2027. The fed said the "committee will deliver price stability." NBC News noted that, in contrast with previous documents, the Fed refrained from communicating what it might do in future meetings.
Elsewhere, oil remained largely flat as the U.S. and Iran continue moving forward with their deal to cease hostilities.
President Donald Trump appeared to say on Wednesday that global oil reserves would have ran out in four weeks without a deal.
Speaking to press while at the G7 summit in France, Trump said "there are reserves all over the world, and we would really run out, and there'll be a time when you wouldn't be able to get it." He added that such a scenario would have been "bedlam."
