NEW YORK (AP) — The U.S. stock market sank Wednesday after nearly half the policymakers at the Federal Reserve indicated they may want to raise interest rates before the end of the year. Higher rates can keep a lid on inflation, but they also slow the economy and hurt prices for investments.
The S&P 500 slumped 1.1% and erased an earlier, modest gain after the Fed released projections showing nine of 18 policymakers see the central bank raising its main interest rate at least once this year. The Dow Jones Industrial Average went from a gain of 281 points in the morning to a drop of 438 points, or 0.8%, as of 3:30 p.m. Eastern time, and the Nasdaq composite sank 1%.
One important policymaker at the Fed did not give a forecast for where the federal funds rate may end 2026 and the next couple years: Chairman Kevin Warsh. In his first press conference as head of the U.S. central bank, Warsh said he's also considering a revamp of how the Fed communicates with the market and U.S. households and businesses.
