Stocks fell on Wednesday as market participants reacted to comments from Federal Reserve Chair Jerome Powell that inflation is still too high and the central bank plans to take further action to stabilize prices. The Dow Jones Industrial Average tumbled over 500 points, while the S&P 500 and Nasdaq dropped 2.5% and 3.4%, respectively.
Here's how the market settled on Wednesday:
S&P 500 Index (NYSE: SPY): -2.51% or -96.62 points to 3,759.48
Dow Jones Industrial Average (NYSE: DIA): -1.55% or -506.43 points to 32,146.77
Nasdaq Composite Index (NASDAQ: QQQ): -3.36% or -366.05 points to 10,524.80
At the conclusion of it two-day policy meeting, the Fed issued another 75 basis point interest rate hike Wednesday afternoon. In its statement, policymakers indicated they "will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments."
Following the Fed's decision, Powell said the central bank's ultimate target for interest rate hikes has increased in response to persistently high inflation.
"We still have some ways to go and incoming data since our last meeting suggests that the ultimate level of interest rates will be higher than previously expected," Powell said on Wednesday. Powell added that it was "premature" to talk about pausing rate hikes at this time.
The central bank's latest decision comes after the release of another strong labor market report, with the Job Openings and Labor Turnover Survey (JOLTS) report showing better-than-expected results despite inflationary pressures and the Fed's aggressive measures.
In economic news, the ADP Employment report for October showed the addition of 239,000 private payrolls last month, signaling that the labor market is continuing to remain strong despite rising interest rates. The ADP report comes two days before the "official" jobs report from the Bureau of Labor Statistics for October.
Elsewhere, Goldman Sachs (NYSE: GS) reported Wednesday that Big Tech has suffered its worst five-day stretch ever, with group of companies losing nearly $1 trillion in market cap. The losses were driven by sell-offs for companies like Meta Platforms (NASDAQ: META), Alphabet (NASDAQ: GOOGL), Microsoft (NASDAQ: MSFT) and Amazon (NASDAQ: AMZN).
On the earnings front, Airbnb (NASDAQ: ABNB) fell over 13% on Wednesday after the company's top end of its fourth-quarter revenue guidance came in below expectations. Match Group (NASDAQ: MTCH) rose 2% after the company posted higher-than-expected revenue for the third quarter. Chegg (NYSE: CHGG) rose over 20% after the company beat estimates for both top and bottom lines for the third quarter.