U.S. stocks sold off after the Fed held rates at 3.5% to 3.75% but projected a higher 2026 path, with the Dow down 544 points, the S&P 500 off 1.4% and the Nasdaq losing 1.5%.
The shift came from a more hawkish dot plot: the median year-end fed funds estimate rose to 3.8% from 3.4% in March, implying at least one rate hike next year.
Treasury yields jumped in response, with the 2-year yield rising 15 basis points to 4.205% as investors repriced expectations for easier policy under new Chair Kevin Warsh.
Warsh reinforced that move by repeatedly stressing "price stability" and declining to submit his own rate projection, undercutting earlier hopes that Trump's nominee would quickly steer the Fed toward cuts.