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)

WOLFSBURG, Germany--(BUSINESS WIRE)--Nov 1, 2026--

Nearly 600 industry leaders from China and Germany gathered in Wolfsburg for the 10th Sino-German Automotive Conference on Friday, focusing on emerging investment and cooperation models against the backdrop of a global transition toward electric and digital mobility.

This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20261101630544/en/

Participants at the event, held at Volkswagen Group’s headquarters Autostadt, emphasized the need for both nations to forge consensus, accelerate innovation, and deepen bilateral ties to navigate the industry’s shift toward electrification and digitization.

Olaf Lies, Minister-President of Lower Saxony, said the conference sends a clear signal to industry stakeholders.

"The conference brings us together to shape the future of our industry," Lies said. "Electrification and digitization represent the single largest shift in automotive history. Only by exchanging experience, learning from each other, and collaborating can we win the future."

Liu Minqiang, Director General of China International Investment Promotion Agency, noted that surveys show most German firms remain bullish on China. He highlighted China’s market capacity and the green transition as fertile ground for bilateral partnerships.

"The global automotive sector is at a critical juncture, marked by rapid technological iterations and restructuring market dynamics," Liu said. "We should focus on elevating technology, products, and services to benefit consumers and drive high-quality development."

Thomas Schmall, Board Member of Volkswagen AG, stressed that China is no longer merely a sales market, but an essential technology hub.

"Establishing solid partnerships is particularly crucial under the current backdrop of accelerated transformation and heightened competition," Schmall said.

The conference featured four parallel sub-forums focusing on "AI & Software-Defined Vehicle (SDV)”, “Battery & Energy”, “Future Factory building”, and “Regulation & Compliance”. Representatives from hundreds of enterprises from China and Germany shared their operational experiences and strategic insights.

Delegates agreed that China and Germany possess distinct, complementary strengths across key sectors, creating potential for bilateral cooperation. They noted that the industrial transformation offers a timely opportunity to jointly expand global market share. Industry leaders emphasized that by leveraging their advantages, both nations can meet consumer needs and achieve win-win outcomes during this shift.

The annual conference, organized by the Investment Promotion Agency of China’s Ministry of Commerce alongside auto clusters from nearly ten German federal states, alternates between China and Germany. Supported strategically by Volkswagen, this year’s gathering marks the largest iteration held in Germany to date.

Liu Minqiang delivers opening speech at the Conference.