The Dow appeared to be the worst hit after shedding 351.978 points and closing at its lowest level so far this year at 23,323.66, shedding a 380 point gain. The S&P 500 index followed, falling 1.5 percent to finish at a 2,506.96 low with the Nasdaq Composite slipping 2.1 percent to 6,636.83 prompting shares in Apple to tumble by three percent. The bank and stocks rollover came as a response to the Federal Reserve raising its benchmark interest rates overnight, promoting traders to lose faith in the American stock indexes. A press conference from the Federal Reserve by chairman Jerome Powell did not suggest the central bank would slow its pace of rate hikes as quickly as some hoped.
In fact, the markets tumbled lower after Mr Powell’s comments that that the central bank would continue to feel the squeeze at its current slow pace, sparking fears of a stock market meltdown.
Expert James Paulsen, chief market strategist at Leuthold Group, warned: “I think the market reaction to all of this is the Fed is going to overdo it.
“Powell said he sees no problem with balance sheet run off. That’s the one that hurts, that’s another potential path of dovishness that he didn’t take.”
He added: “I think that the run-off of the balance sheet has been smooth and has served its purpose. I don’t see us changing that.”
Equities across a range of sectors plunged following the announcement today.
Power companies including Target, Amazon, Newell Brands and Nordstrom all fell by more than three percent with banks such as Citigroup and Wells Fargo each losing more than 1.5 percent.
Boeing dropped 2.5 percent and the United States Steel Corp lost six percent, adding to further devastation.
Quincy Krosby, chief market strategist at Prudential, too CNBC: “The Fed still sees a solid underpinning for the economy based on the numbers and still sees the viability of two rate hikes next year.
“The market needs, for the Fed’s statement to prove correct, an unequivocally strong parade of strong economic data for that forecast to hold.
“That’s been the tug of war in the market. The old adage is that the price action — that is the market — gets it before the data. That’s at the core of the debate.”
The news come after it was announced the Dow has lost more than 1,250 points this week.