Dow closes 500 points lower as Warsh’s first Fed meeting sets off surge in bond yields

Stocks fell on Wednesday, while Treasury yields surged, as investors grew uncertain over the path of monetary policy after several Federal Reserve officials indicated there could be a rate hike this year to tamp down on inflation.

The Dow Jones Industrial Average  fell 507.12 points, or 0.98%, after earlier hitting a fresh all-time intraday record — the index’s third consecutive high. The S&P 500  lost 1.21%, while the Nasdaq Composite  shed 1.34%.

Major tech bellwethers led the losses, with Microsoft, Meta Platforms, Alphabet  and Amazon  all trading in the red. Hot IPO SpaceX  hurt sentiment as well, falling for the first time since going public on Friday.

Gains in chip stocks like Intel  and Micron Technology  helped stem the overall market’s losses.

At the conclusion of the Fed’s two-day meeting, the first under new Chairman Kevin Warsh, the central bank left interest rates unchanged at a target range of 3.5% to 3.75%.

A number of Fed officials see rates increasing in 2026, according to the summary of economic projections. The fed funds rate’s median estimate for year-end now stands at 3.8%. That’s an increase from 3.4% in the prior projections from March, which suggests that the committee sees at least one rate hike as necessary in 2026.