NEW YORK, Sept. 21 (Xinhua) -- U.S. stocks fell sharply on Wednesday after the Federal Reserve approved another outsized rate hike.
The Dow Jones Industrial Average plunged 522.45 points, or 1.70 percent, to 30,183.78. The S&P 500 dropped 66 points, or 1.71 percent, to 3,789.93. The Nasdaq Composite Index decreased 204.86 points, or 1.79 percent, to 11,220.19.
All the 11 primary S&P 500 sectors ended in red, with consumer discretionary and communication services down 2.37 percent and 2.29 percent, respectively, leading the losses.
The market weakness came after the Fed raised interest rates by 75 basis points for a third straight time this year and signaled more aggressive rate hikes ahead in a bid to rein in inflation.
The Federal Open Market Committee (FOMC), the Fed's policy-setting body, decided to raise the target range for the federal funds rate to 3 to 3.25 percent, the Fed said in a statement after a two-day policy meeting.
The decision came after the U.S. central bank raised the benchmark interest rate by 75 basis points at both its June and July meetings, marking the toughest policy move in decades.
The Fed's quarterly economic projections released Wednesday showed that the median FOMC projection for the federal funds rate at the end of this year has jumped to 4.4 percent and the median projection for 2023 year-end federal funds rate is 4.6 percent. The forecasts showed a steeper rate path than Fed officials laid out in June.
"The biggest surprises were in the forecast, starting with higher and tighter than expected median Fed funds estimates," Chris Low, chief economist at FHN Financial, said Wednesday in a note, adding the tightening path was "very hawkish."
The Fed's latest move came amid growing fears that aggressive rate hike campaign could tip the U.S. economy into a recession.
In his press conference on Wednesday, Fed Chair Jerome Powell conceded that a recession is possible and that securing a soft landing will be "very challenging."
"The chances of a soft landing are likely to diminish" if central bank officials find that monetary policy needs to be more restrictive or restrictive for longer, he said.
The Fed has been raising interest rates since March as it struggles to cool inflation that's running at multi-decade highs, but recent data suggested that the efforts were not yet having much of an effect.
The U.S. consumer price index for August released earlier this month showed inflation came in hotter than expected, indicating the Fed has a much harder task on its hands than previously thought. ■