US stocks plummet as Fed chair dims hopes of rate pause

By Ovunc Kutlu

ANKARA (AA) - US stocks gave up earlier gains and plummeted Wednesday to close with huge losses as Federal Reserve Chair Jerome Powell dimmed hopes that the central bank would pause interest rate hikes.

Stocks climbed into positive territory right after the conclusion of the central bank's critical two-day meeting and a statement that hinted it could lift its foot off the gas on rate hikes. The Fed noted that in determining the pace of future increases it will take into account the cumulative tightening and how it affects economic activity.

The mood in the markets, however, turned gloomy after Powell said there are “some ways to go” with rate hikes and the “ultimate level” of increases will be higher than previously expected.

Powell emphasized it is too early to consider putting brakes on rate increases. "It is very premature, in my view, to think about or be talking about pausing our rate hikes. We have a ways to go."

"We have some ground left to cover here, and cover we will," he said. "The question of when to moderate the pace of increases is much less important than the question of how high to raise rates and how long to keep the monetary policy restrictive, which will be our principle focus.”

The unexpected hawkish remarks had the Dow Jones plummeting 505 points, or 1.55%, to finish at 32,147.

The S&P 500 lost 96 points, or 2.5%, to 3,759 and the Nasdaq fell 366 points, or 3.36%, to 10,524.

The VIX volatility index, also known as the fear index, was up 0.2% to 25.86. The 10-year US Treasury yield rose 0.6% to 4.076%.

The dollar index jumped 0.5% to 112.02, hovering around its highest in 20 years, while the euro fell 0.5% to $0.9823 against the greenback.

Precious metals gave up earlier gains, with gold shedding 0.7% to $1,636 and silver decreasing 2% to $19.24.

Oil prices were up 0.9%. Global oil benchmark Brent crude was trading at $95.50 per barrel, while the US benchmark West Texas Intermediate was around $89.20.