US close: Stocks tank on rate hike speculation, Nasdaq hits three-month low

(Sharecast News) - US stock markets dropped sharply on Wednesday as selling pressure intensified following the Federal Reserve meeting, which revealed a growing chorus of policymakers calling for tighter monetary policy.

Another escalation in the conflict between the US and Iran further drove down share prices, with inflationary risks on the rise as oil prices jumped once again. After falling over the past three sessions, WTI crude was up 7.5% at $85.22 a barrel while Brent gained 8.0% to $90.85.

Donald Trump told Fox News that the US planned to start hitting Iran "hard" in response to surprise attacks a day earlier. US Central Command confirmed that Islamic Revolutionary Guard Corps forces had launched "multiple ballistic missiles" on Tuesday in an attempted surprise attack on US troops in the Middle East, all of which were said to have been intercepted.

The Dow finished 2.2% lower at 51,594.14, its lowest close since 18 June; the S&P 500 fell 1.5% to 7,316.15, its lowest since 10 June; while the Nasdaq slipped 1.7% to 24,442.94, its lowest since 23 April.

While the Federal Open Market Committee held on to rates as expected - the Fed Funds Rate range was maintained at between 3.5% and 3.75%, Kevin Warsh said the central bank had a "good family fight" with three committee members voting to raise rates.

While the Fed chair refrained from giving explicit guidance about the future path of interest rates, "speculation about a hike will resurge in the coming weeks", according to analysts at Rabobank following the decision.

"We still think that the most likely outcome is that the Fed remains on hold through 2026. We expect the FOMC to talk extensively about the case for rate hikes, while ultimately refraining from taking action. However, the three dissents today indicate that the risk of a hike in the coming months has increased," Rabobank said.

The yield on a 10-year US Treasury note was 7.3 basis points higher at 4.864% after the closing bell.

In equity news, consumer goods giant Procter & Gamble finished lower after warning of slower growth in the year ahead, as uneven demand across several categories and a tough consumer backdrop weighed on its latest quarterly performance. Procter & Gamble said FY27 net sales were expected to rise 1% to 3%, a step down from the 3.3% increase delivered in FY26 and, at the midpoint, slightly below analysts' expectations.

Microsoft fell on the news that the UK's Competition and Markets Authority has launched an investigation into the company on concerns it may have misled customers about the cost of Microsoft 365 subscriptions.

Shares in VF Corp dropped sharply despite the outdoor and activewear brand owner lifting full-year guidance after a strong first quarter, with investors reacting to a weak trading performance at Vans and the exit of its chief financial officer.

Meanwhile, earnings from 'Magnificent Seven' members Microsoft and Meta Platforms will also be in focus on Wednesday, with the tech giants slated to release their latest quarterly figures after the close, as were the likes of Arm, Qualcomm, Starbucks and Robinhood Markets.

In other news, US mortgage applications decreased by 6.4% in the week ended 24 July, according to the Mortgage Bankers Associaiton, more than reversing the prior week's 1.9% increase. Last week's drop came as benchmark mortgage rates increased, with the 30-year fixed contract rising to a one-year high of 6.76%, amid inflationary pressures and evidence that a robust labour market supported expectations that the Federal Reserve rate will look to hike interest rates before the end of 2026. Applications to refinance a mortgage, which are more sensitive to week-to-week interest changes, fell 9.9% week-on-week, while applications to purchase a home fell by 3.6%.

Dow Jones - Risers

Dow Chemical Co. (DOW) $30.45 5.55%

Salesforce.Com Inc. (CRM) $188.38 3.79%

Chevron Corp. (CVX) $191.86 2.28%

Coca-Cola Co. (KO) $89.08 0.92%

Visa Inc. (V) $368.73 0.58%

Nike Inc. (NKE) $43.22 0.39%

Dow Jones - Fallers

Caterpillar Inc. (CAT) $782.71 -6.91%

Intel Corp. (INTC) $81.88 -5.80%

Goldman Sachs Group Inc. (GS) $980.75 -5.09%

JP Morgan Chase & Co. (JPM) $344.71 -3.53%

Boeing Co. (BA) $214.01 -3.41%

3M Co. (MMM) $177.95 -2.48%

Travelers Company Inc. (TRV) $389.01 -2.07%

Verizon Communications Inc. (VZ) $47.22 -2.01%

Unitedhealth Group Inc. (UNH) $420.57 -1.92%

Procter & Gamble Co. (PG) $146.10 -1.87%

S&P 500 - Risers

Cognizant Technology Solutions Corp. (CTSH) $55.97 13.37%

Charter Communications Inc. (CHTR) $145.20 8.82%

Expedia Group Inc. (EXPE) $304.27 8.36%

Dxc Technology Company (DXC) $11.77 8.28%

Adobe Systems Inc. (ADBE) $263.43 7.20%

Intuit Inc. (INTU) $333.13 6.79%

DENTSPLY Sirona Inc. (XRAY) $14.20 6.77%

Incyte Corp. (INCY) $127.10 6.38%

Gartner Inc. (IT) $165.65 6.29%

Booking Holdings Inc. (BKNG) $201.30 5.40%

S&P 500 - Fallers

VF Corp. (VFC) $15.08 -17.37%

KLA-Tencor Corp. (KLAC) $170.19 -12.39%

Micron Technology Inc. (MU) $739.00 -11.15%

Masco Corp. (MAS) $72.56 -11.09%

Applied Materials Inc. (AMAT) $436.45 -10.46%

Coterra Energy Inc. (CTRA) $32.56 -8.62%

FMC Corp. (FMC) $10.01 -8.50%

Lam Research Corp. (LRCX) $252.35 -7.72%

Advanced Micro Devices Inc. (AMD) $429.56 -7.24%

Fortive Corporation (FTV) $59.54 -7.10%

Nasdaq 100 - Risers

Cognizant Technology Solutions Corp. (CTSH) $55.97 13.37%

Workday, Inc. (WDAY) $168.01 10.85%

Charter Communications Inc. (CHTR) $145.20 8.82%

Expedia Group Inc. (EXPE) $304.27 8.36%

Adobe Systems Inc. (ADBE) $263.43 7.20%

Intuit Inc. (INTU) $333.13 6.79%

DENTSPLY Sirona Inc. (XRAY) $14.20 6.77%

Incyte Corp. (INCY) $127.10 6.38%

Liberty Global plc Series A (LBTYA) $10.53 6.00%

Liberty Global plc Series C (LBTYK) $10.25 5.67%

Nasdaq 100 - Fallers

Qvc Group Inc Series A (QVCGA) $0.34 -13.49%

KLA-Tencor Corp. (KLAC) $170.19 -12.39%

Micron Technology Inc. (MU) $739.00 -11.15%

Applied Materials Inc. (AMAT) $436.45 -10.46%

Lam Research Corp. (LRCX) $252.35 -7.72%

Synopsys Inc. (SNPS) $373.69 -6.58%

Microchip Technology Inc. (MCHP) $71.37 -6.52%

QUALCOMM Inc. (QCOM) $155.68 -5.86%

Intel Corp. (INTC) $81.88 -5.80%

Cadence Design Systems Inc. (CDNS) $332.76 -5.60%