Stocks fell after the Federal Reserve hiked its benchmark interest rate by three-quarters of a percentage or 75 basis points point on Wednesday afternoon, as expected.

The key indexes lost their gains and traded lower after the Fed announcement. The S&P 500 fell 0.6% while the tech-heavy Nasdaq Composite was down 0.7% and Dow Jones Industrial Average was down 0.6%.

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Investors had been closely looking for how aggressive the Fed would be in its battle to tame inflation. Higher interest rates generally hurt corporate earnings and stock prices.

Disney and Caterpillar pulled the Dow lower, falling nearly
2% each, amid worries that the Fed may be going too far in hiking rates. Materials,
communication services and consumer discretionary were the worst performing
sectors in the S&P 500, losing more than 1% each.

Also Read | Treasury yields rise as US Fed raises interest rates by 75 basis points

The Fed said it expects its so-called terminal rate to
reach 4.6% to curb persistently high US inflation. That’s the rate the central
bank will end its tightening regime.

The central bank signaled that it plans to stay aggressive
through the end of the year, hiking rates to 4.4% before 2022 is out.

Treasury yields surged on the news. The two-year yield,
which hit its highest level since 2007, last traded at around 4.1%. The 10-year
Treasury yield jumped to about 3.6%.

Also Read | Bitcoin, Ethereum falls over 1% as US Fed hikes key interest rates

Shares of General Mills hit an all-time high after its
latest earnings report. Defense stock also surged as Russian President Vladimir
Putting called for a partial military mobilization.

The S&P 500 is down more than 8% in the last one month,
losing most of a summer bounce, as investor begin to fear that the Fed will
raise interest rates too far and put the economy into a recession. The benchmark
is flat for the week heading into Wednesday’s decision.