STORY: U.S. stocks ended sharply lower on Wednesday in a wild, whipsaw session in which the market quickly turned positive and then reversed course again, after comments from Federal Reserve Chair Jerome Powell shattered initial optimism that the Fed might be ready to ease up on its fight against inflation.
The central bank again delivered another giant rate increase of 75 basis points - the fourth this year.
Powell then added that it was "very premature" to be thinking about pausing rate hikes.
That was enough to unnerve investors.
The Dow ended 1.5% lower. The S&P 500 fell 2.5%, while the Nasdaq dropped well over 3%.
Eric Sterner, chief investment officer at Apollon Wealth Management, explains.
"The market initially reacted positively when they saw the, as anticipated, 75-basis-point rate hike and hints of possible slower rate hikes in the future. I think that's what the markets were most interested in as far as whether the Fed was acknowledging that it may be time to slow down the rate hikes. It seemed that the investor sentiment soured a bit during Jerome Powell’s news conference, as it definitely had a more hawkish tone... We still have a ways to go as far as a lot more work to do to bring inflation down. And the ultimate terminal rate is going to be most likely higher than what we thought a few months ago, just due to inflation stubbornness and the resiliency of the labor market, which keeps upward pressure on the inflation.”
Megacap tech stocks Apple, Microsoft and Amazon all posted big losses amid the prospect of prolonged high interest rates.
Shares of Meta, which can hardly be called a megacap anymore, also lost ground - it's market cap now smaller than that of PepsiCo.
Among the gainers was Tinder-owner Match Group, which reported better-than-expected third-quarter revenue.
And shares of CVS Health rose after the company raised its annual profit forecast and settled thousands of lawsuits with state and local governments over alleged mishandling of opioid painkillers, which will cost the pharmacy chain about $5 billion over 10 years.