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US stocks plummet 1.6% after Fed shakes markets with another rate hike

Major US stock market indexes plummeted 1.6% Wednesday after the Federal Reserve shook the markets with another interest rate hike. 

The Dow Jones Industrial Average dove 530 points, or 1.63%, to close at 32,030. The S&P 500 lost 65 points, or 1.65%, to 3,936.

The tech-heavy Nasdaq decreased 190 points, or 1.6%, to 11,669.

The Fed earlier raised its benchmark interest rate by another 25 basis points despite a banking crisis causing turmoil in the US financial sector after the sudden demise of four banks in a matter of weeks.

Although Fed Chair Jerome Powell said “isolated banking problems, if left unaddressed, can undermine confidence in healthy banks and threaten the ability of the banking system as a whole,” he said it is “too early” to assess the effect of the banking crisis.

Powell underlined that he is still optimistic about a soft landing — a situation where the bank raises rates too much and too high that leads to an economic slowdown but avoids a recession.

The VIX volatility index, also known as the fear index, rose 4.1% to 22.26, while the 10-year US Treasury yield fell 4.3% to 3.451%.

The dollar index fell 0.7% to 102.54, while the euro added 0.04% to $1.0859 against the greenback.

Precious metals were in positive territory as gold rose 1.5% to $1,969 per ounce and silver gained 2.6% to $22.99.

Oil prices were mixed, with global benchmark Brent crude steady at $75.80 per barrel and US benchmark West Texas Intermediate crude at $69.92.

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