The S&P 500 pulled back 3.6%, erasing a rally from a day earlier and marking its biggest loss in almost two years. The Dow fell 1,063 points, or 3.1%. Tech stocks fell the most, pulling the Nasdaq down 5%. The yield on the 10-year Treasury note rose to 3.04%. Rising yields are sure to put upward pressure on mortgage rates, which are already at their highest level since 2009.
On Wednesday, the Fed raised its benchmark interest rate by half a percentage point as part of an effort to slow consumer borrowing and tamp down inflation, which is at a four-decade high. The market rallied when Fed Chair Jerome Powell dismissed the possibility the Fed could resort to a more aggressive three-quarters point hike in the future.
Now, traders are starting to fret more about the impact of the Fed’s moves to dampen demand and slow the economy.
“The Fed is between a rock and a hard place, and because of instant information investors are experiencing both fear and greed at the exact same moment,” said Sam Stovall, chief investment strategist at CFRA.