US stocks slip after the Fed hikes interest rates and hints more increases may be on the way

NEW YORK (AP) — U.S. stocks slipped Wednesday after the Federal Reserve hiked its main interest rate for the first time in three years and suggested more may be ahead as it tries to get the nation’s high inflation under control.

The S&P 500 fell 0.4% after giving up a modest gain from earlier in the day. The Dow Jones Industrial Average dropped 631 points, or 1.2%, and the Nasdaq composite was nearly unchanged after edging down by less than 0.1%.

Investors generally prefer lower interest rates because higher rates slow the economy’s growth and undercut prices for stocks and other investments.

The U.S. stock market initially held onto its modest, early gains after the Fed announced its decision. The short-term pain of a slower economy may be worth it if it starves inflation of its fuel and gets further increases for the cost of living back to the Fed’s 2% target.

But stock prices weakened later in the day as Fed Chairman Kevin Warsh said repeatedly in a press conference that inflation remains too high and the U.S. economy appears to be strengthening. That could imply the economy is solid enough to withstand more hikes to rates, and other officials at the Fed provided their own forecasts suggesting rates may need to go still higher.

The median Fed official expects the federal funds rate to end this year at 4.1%, according to forecasts published after the central bank’s meeting. That’s up from its current range of 3.75% to 4% following Wednesday’s increase, and it’s up from the median forecast of 3.8% that Fed officials gave three months ago.

Traders, meanwhile, suspect the Fed may go even further. They’re betting on a 38% probability the Fed could hike the federal funds rate to a range of 4.25% to 4.50% by the end of the year, according to data from CME Group.

“Our decision comes at a time when the American economy appears to be strengthening,” Fed Chairman Kevin Warsh said in his press conference.

He pointed to solid U.S. hiring trends, corporate profits and investments by businesses. A report on Wednesday morning, meanwhile, showed shoppers spent much more at U.S. retailers last month than economists expected.

“The plain fact is that inflation is too high and has been for too long,” Warsh said. He later added, “Today‘s action starts to show we’re serious about this.”

It’s the first hike by the Fed to interest rates in three years. The central bank had been on pause for months following cuts to rates in 2024 and 2025, even though inflation has consistently remained above the Fed’s 2% target.

President Donald Trump has been lobbying for interest rates to go lower rather than higher.

On Wall Street, bank stocks fell to some of the market’s sharper losses. A slower U.S. economy could mean less demand for loans from them. Banks also get hurt when the gap narrows between short-term interest rates and longer-term ones because the industry makes profit off the difference.

Following the Fed’s announcements, the two-year Treasury yield jumped to 4.74% from 4.67% late Tuesday. It tends to closely follow expectations for what the Fed will do with the federal funds rate.

The yield on the longer-term 10-year Treasury, meanwhile, takes into account expectations for economic growth and inflation years down the line. It had a more modest increase, ticking up to 5.01% from 5.00% late Tuesday.

Huntington Bancshares fell 5.6%, Citizens Financial Group sank 4.8% and JPMorgan Chase slipped 1%.

The largest loss in the S&P 500 came from J.B. Hunt Transport Services, which lost 13.3%. Its chief financial officer told a conference of analysts late Tuesday that it’s facing higher costs and expects its earnings to drop 5% to 10% from the second quarter to the third.

Stocks of oil companies also weighed on the market after the price for a barrel of Brent crude fell 2.7% to $105.83. It was the first drop of the week for Brent, which has gotten near $110 in recent days.

Helping to limit the market’s losses were gains for some influential stocks in the artificial-intelligence industry.

Nvidia rose 0.8%, and Advanced Micro Devices climbed 1.6% to recover more of their losses from earlier in the week. AI stocks slid worldwide Monday after leaders of the AI industry called for a slowdown in development to address safety issues for humanity.

All told, the S&P 500 fell 33.92 points to 7,551.81. The Dow Jones Industrial Average dropped 631.21 to 51,461.90, and the Nasdaq composite slipped 3.15 to 25,978.42.

In stock markets abroad, indexes rose across much of Europe and Asia. South Korea’s Kospi climbed 1.4% for one of the world’s biggest gains.

Inflation is a worldwide problem, and the European Central Bank hiked rates last week to help diminish it.

AP Business Writers Chan Ho-him and Michelle Chapman contributed to this report.

Screens display a news conference held by Federal Reserve chairman Kevin Warsh on the floor of the New York Stock Exchange in New York, Wednesday, Sept. 16, 2026. (AP Photo/Seth Wenig)

Screens display financial information on the floor at the New York Stock Exchange in New York, Wednesday, Sept. 16, 2026. (AP Photo/Seth Wenig)

Michael Pistillo works on the floor at the New York Stock Exchange in New York, Monday, Sept. 14, 2026. (AP Photo/Seth Wenig)

Michael Gallucchi Traders works on the floor at the New York Stock Exchange in New York, Monday, Sept. 14, 2026. (AP Photo/Seth Wenig)

A dealer walks past near the screens showing the Korea Composite Stock Price Index (KOSPI) and the foreign exchange rate between U.S. dollar and South Korean won at a dealing room of Hana Bank in Seoul, South Korea, Wednesday, Sept. 16, 2026. (AP Photo/Lee Jin-man)

Members of media shoot the screens showing the Korea Composite Stock Price Index (KOSPI), the Korean Securities Dealers Automated Quotations (KOSDAQ) and the foreign exchange rate between U.S. dollar and South Korean won at a dealing room of Hana Bank in Seoul, South Korea, Wednesday, Sept. 16, 2026. (AP Photo/Lee Jin-man)

A dealer walks past the screen showing the Korea Composite Stock Price Index (KOSPI) at a dealing room of Hana Bank in Seoul, South Korea, Wednesday, Sept. 16, 2026. (AP Photo/Lee Jin-man)

The screens showing the foreign exchange rates are displayed at a dealing room of Hana Bank in Seoul, South Korea, Wednesday, Sept. 16, 2026. (AP Photo/Lee Jin-man)

WEST PALM BEACH, Fla. (AP) — A business jet carrying nine people nose-dived into a South Florida neighborhood Sunday and erupted into a giant fireball that appeared to just miss homes before crashing near a busy roadway. All passengers on board were killed, the nation's transportation secretary said.

Video recorded by people inside their cars captured the terrifying moment the aircraft plunged from the sky, before striking near the roadway and exploding. Flames flickered around chunks of pavement lining the crater as people milled about, expressing shock that it landed only feet from homes and only inches from passing vehicles. Thick black smoke engulfed the crash site.

Transportation Secretary Sean Duffy posted on X on Sunday that the Learjet 60 crashed in Palm Beach County at 12:50 p.m. and called it a “horrific tragedy.” The Federal Aviation Administration is sending a team to support the National Transportation Safety Board’s investigation into the cause, he said.

Florida Gov. Ron DeSantis said the crash left a crater in the ground and spewed debris. There were no immediate reports of anyone on the ground injured or killed, he said.

“It was a cataclysmic plane crash,” DeSantis told reporters at the scene on Sunday. “It looked like a missile going down and left a big crater on the side of the road.”

Rain pounded the region on Sunday. A flood watch due to excessive rainfall was in effect through Monday afternoon, the National Weather Service said.

The aircraft had departed Austin-Bergstrom International Airport in Texas and was headed to the Bahamas, according to the Federal Aviation Administration. Authorities did not immediately say what caused the jet to go down or who was on it.

The plane was heading east at 35,000 feet (about 11 kilometers) when pilots reported turbulence, icing and precipitation and requested to climb 2,000 feet (about 610 meters).

Moments later, the plane entered a steep dive, first 10,000 feet per minute, then 20,000 feet per minute and up to 30,000 feet per minute, speeding the plane beyond its design limits, according to air traffic control recordings and flight tracking data.

A pilot declared an emergency and issued distress calls. The plane banked sharply to the right before it crashed steeply into the ground.

Minutes before the crash, the pilot reported ice accumulating on the jet and turbulence that was jolting it by as much as 700 feet, according to air traffic control recordings captured by LiveATC.net.

“We have light, clear ice that is manageable and moderate turbulence,” the pilot told controllers.

But the situation rapidly deteriorated. After encountering precipitation and requesting to climb, the pilot declared an emergency as the aircraft began losing altitude at an alarming rate.

“We’re descending 8,000 – mayday, mayday - we’re descending 10,000 feet per minute,” the pilot radioed.

“We are in an overspeed condition descending 20,000 feet per minute,” the pilot radioed, before delivering a devastating acknowledgment of what was about to happen. “We’re going to crash into the ground.”

Jim Reynolds, a spokesperson for Austin-Bergstrom International Airport, said it was a private aircraft. He could not immediately provide details about who was on the flight.

Local authorities are evacuating about 600 people from a nearby mobile home community while federal officials investigate the crash. The road will be closed until further notice, county officials said.

Law enforcement respond to a plane crash in Palm Beach County, Fla., on Sunday, Nov. 1, 2026. (AP Photo/Mark Elias)

Law enforcement respond to a plane crash in Palm Beach County, Fla., on Sunday, Nov. 1, 2026. (AP Photo/Mark Elias)

Law enforcement respond to a plane crash in Palm Beach County, Fla., on Sunday, Nov. 1, 2026. (AP Photo/Mark Elias)