U.S. stocks gave up gains Wednesday and slid into the red as the Federal Reserve delivered another outsized interest rate hike in its fight against stubborn inflation.
The U.S. central bank lifted its benchmark policy rate by 0.75% for a third consecutive time, bringing the federal funds rate to a new range of 3.0% to 3.25% — its highest level since 2008 — from a current range between 2.25% and 2.5%.
The benchmark S&P 500 slid 0.6%, while the Dow Jones Industrial Average tumbled 200 points. The technology-heavy Nasdaq Composite was off by 0.7%. Meanwhile, the CBOE Volatility Index (^VIX) – Wall Street’s “fear” gauge – spiked 11% to 30.18.
Activity across the bond market was in focus in the aftermath of the Fed meeting. Treasury yields continued their perilous climb Wednesday, with the rate-sensitive 2-year Treasury note surpassing 4.1% — the highest level since 2007. The benchmark U.S. 10-year note held above 3.5%, its highest level since 2011.
Market participants will also tune in to remarks from Fed Chair Jerome Powell following the meeting, along with assessing the economic projections of U.S. central bank members and the latest dot plot showing each official’s forecast for the Fed’s short-term interest rate.
“The meeting-by-meeting and data-dependent approach that central banks around the world have adopted will allow for some easing in the pace of monetary policy tightening in the coming months, but central bankers have warned that such action would only happen if, and when there is compelling evidence of inflation cooling,” EY Parthenon Chief Economist Gregory Daco said in a note.
Among market movers Wednesday was General Mills (GIS), which rose nearly 6% after the company reported better-than-expected quarterly earnings and raised its full-year sales outlook as it benefits from higher prices on breakfast cereals, snack bars and pet food.
Beyond Meat (BYND) shares gave up an earlier gain after announcing a partnership with Taco Bell (YUM) on their first menu collaboration: Beyond Carne Asada Steak. The news came after the meat substitute producer suspended Chief Operating Officer Doug Ramsey over his arrest for allegedly biting a man’s nose this weekend in a road rage incident.
Stitch Fix (SFIX) shares rebounded to rise nearly 8% after the company reported disappointing fourth-quarter revenue expectations and sales guidance and posted a drop in active clients.
Across the Atlantic, Russian President Vladimir Putin announced a “partial mobilization” of Ukraine and vowed to annex occupied territories. In a televised message, he called the moves “urgent, necessary steps to defend the sovereignty, security and territorial integrity of Russia.”
The threat of an escalation in Russia’s war against Ukraine rattled markets. Oil prices climbed, with West Texas Intermediate (WTI) crude futures up 2.5% to $86.07 per barrel and Brent crude oil 2.4% higher at $92.81 per barrel. The dollar rallied toward a fresh record high while the euro slid. In crypto markets, bitcoin (BTC-USD) fell back below $19,000.
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Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc
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