Wall Street closes in the red after Fed’s latest rate hike in 2022

US stocks closed lower on Wednesday in a volatile market after the announcement of the Federal Reserve (Fed) to raise interest rates by 50 basis points, while announcing economic projections that call for higher rates for longer.

The central bank raised interest rates by half a percentage point on Wednesday and projected at least an additional 75 basis points of higher borrowing costs by the end of 2023, as well as rising unemployment and a near standstill in economic growth.

The latest quarterly summary of economic projections from the Fed shows that US central bankers see the official interest rate, now in the 4.25% to 4.5% range, at 5.1% by the end of next year, according to the median estimate of the Fed’s 19 policymakers , above the vision of 4.6% at the end of September.

In comments after the increase, the president of the FedPresident Jerome Powell said it was too soon to talk about cutting rates as the focus was on making the policy stance tight enough to push inflation towards the central bank’s 2% target.

“They may be using this very aggressive rate forecast to reduce the easing that has occurred in the last couple of months,” said Rhys Williams, chief strategist at Spouting Rock Asset Management in Bryn Mawr, Pennsylvania.

The Dow Jones Industrial Average fell 142.29 points, or 0.42%, to 33,966.35 units, while the S&P 500 it lost 24.33 points, or 0.61%, to end at 3,995.32 points. The Nasdaq Composite it dropped 85.92 points, or 0.76%, to 11,170.89 units.

Fears that aggressive interest rate hikes by major central banks will push the global economy into recession have weighed on risk assets such as stocks.

Each of the three main averages of Wall Street it is on track for its first annual decline since 2018, and its biggest annual percentage drop since the 2008 financial crisis.

The titles of Tesla Inc fell after an analyst at Goldman Sachs slashed the price target on the electric vehicle maker’s shares.

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