NEW YORK (AP) — U.S. stocks dropped on speculation the Federal Reserve may raise interest rates this year to keep a lid on inflation.
The S&P 500 slumped 1.2% Wednesday after the Fed released projections showing nearly half its policymakers foresee at least one increase to its main interest rate this year. The Dow Jones Industrial Average went from a gain of 0.5% in the morning to a drop of 1%, while the Nasdaq composite sank 1.3%.
Treasury yields climbed on rising expectations for a hike to rates in 2026.
Higher rates can tap the brakes on inflation, but they also slow the economy and hurt prices for investments.