U.S. stocks fell across the board on Wednesday after Federal Reserve chair Jerome Powell reiterated more rate hikes are on the way during Congressional testimony.
The Nasdaq Composite lost 1.2%, while the S&P 500 fell 0.5% and the Dow Jones Industrial Average slipped 0.3%.
The Fed held interest rates steady for the first time in 15 months last week, pausing its aggressive tightening campaign to assess how the economy is faring in the face of higher borrowing costs.
FED WARNS TIGHTER CREDIT CONDITIONS COULD SLOW US GROWTH
The widely expected and unanimous decision left interest rates at a range of 5% to 5.25%, the highest level since 2007.
On Wednesday, Powell said "We have been seeing the effects of our policy tightening on demand in the most interest rate–sensitive sectors of the economy."
"It will take time, however, for the full effects of monetary restraint to be realized, especially on inflation," he added. "The economy is facing headwinds from tighter credit conditions for households and businesses, which are likely to weigh on economic activity, hiring, and inflation.
FEDERAL RESERVE BANK OF CLEVELAND PRESIDENT SEES NO 'COMPELLING' REASON TO PAUSE RATE HIKES: REPORT
New economic projections laid out after the Fed meeting earlier this month show most officials expect rates to rise to 5.6% by the end of 2023, suggesting two more quarter-point increases this year.
"Nearly all FOMC participants expect that it will be appropriate to raise interest rates somewhat further by the end of the year," Powell said to lawmakers on Wednesday.
FED PAUSES RATE HIKES FOR FIRST TIME IN 15 MONTHS BUT HINTS AT FUTURE INCREASES
The central bank previously projected a peak rate of 5.1%, indicating that policymakers believe there is more work to be done to wrangle inflation under control.
Twelve of the 18 policymakers predicted at least two more quarter-point rate hikes, while four favored only one more hike. Just two officials supported keeping rates unchanged.
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FOX Business reporter Megan Henney contributed to this report.
