Wall Street stocks fell while the US dollar advanced on Wednesday after the Federal Reserve lifted interest rates for the first time since 2023.

A rate increase had been widely anticipated, but markets judged the central bank's overall message as more hawkish than expected after a majority of Fed policymakers pencilled in at least one more rate hike before the end of 2026.

All three major US stock indices finished lower, with the broad-based S&P 500 down 0.5 percent.

The US dollar advanced against the euro and other major currencies, while increases in US Treasury yields indicated that the market believes from Fed Chair Kevin Warsh's commentary that "the inflation fight isn't a one-and-done rate-hike kind of thing," said Briefing.com.

"The remarks have reinforced the view that today's rate hike may not be an isolated move, with investors focused on the possibility that persistent inflation pressures could require additional tightening in the months ahead."

The US central bank's Federal Open Market Committee voted unanimously to raise rates to between 3.75 and 4.00 percent, citing "elevated" inflation and adding that the rate hike would support a "timelier return" to its two-percent target for the metric.

Before the Fed's announcement, the three major US stock indexes had been gaining ground, ⁠with a chips rebound, giving the tech-heavy Nasdaq ⁠the edge.

Earlier in the session, robust retail sales data suggested consumers were still spending, despite an affordability squeeze due to rising prices, particularly at the gasoline pump.

The war in the Middle East expanded as Saudi warplanes pounded Yemen while Iran-backed Houthi fighters launched drones and missiles at Saudi cities in a signal of Iran's extended reach in the widening conflict.

Even so, oil prices dipped after reports that Saudi Arabia was offering additional crude cargoes via Oman eased concerns about supply disruptions.

Front-month WTI settled down 3.2 percent and Brent crude settled down 2.7 percent.

The Dow Jones Industrial Average fell 631 points, or 1.2 percent, to 51,461, the S&P 500 lost 33 points, or 0.4 percent, to ⁠7,552 and the Nasdaq Composite lost 3 points, or 0.01 percent, to 25,978.

Tech shares were the biggest gainer among the 11 major sectors of the S&P 500, while energy, weighed down by easing crude prices, suffered the largest percentage drop, falling 3.0 percent.

Chevron and Exxon Mobil fell 2.9 percent and 3.5 percent, respectively, while Devon Energy and ConocoPhillips lost more than 5 percent each.

Tech got a lift as semiconductor shares advanced 0.6 percent in their first decisive gain since a joint call from AI executives seeking a slower rate at which capabilities are advanced and industry-wide safety coordination.

Intel jumped 4 percent after a report said South Korea's SK ⁠Hynix was in talks with the company about memory chip manufacturing in the United States. US-listed shares of SK Hynix rose 0.6 percent.

IBM fell 4.4 percent after the company said Anderon, its chip unit, has signed a funding agreement with the US government. (Agencies)



Edited by Cecil Wong