A television station broadcasts Kevin Warsh, chairman of the US Federal Reserve, speaking after a Federal Open Market Committee (FOMC) meeting on the floor of the New York Stock Exchange (NYSE) in New York, US, on Wednesday, June 17, 2026.

Michael Nagle | Bloomberg | Getty Images

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 30-stock index closed at 51,492.55. The S&P 500 lost 1.21% and ended at 7,420.10. The Nasdaq Composite shed 1.34% and settled at 26,021.66.

Major tech bellwethers led the losses, with Microsoft, Meta Platforms, Alphabet and Amazon all closing 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.

Warsh revealed he abstained from submitting a projection, complicating the forecast.

Treasury yields jumped following the decision, with the 2-year yield gaining more than 16 basis points to 4.216%.

"The market reaction at this point is largely to the dot plot … being much more hawkish," said Claudia Sahm, chief economist at New Century Advisors. "The wind has changed a lot in terms of the inflation picture."

Traders also focused on the way Warsh several times during the press conference emphasized the Fed's commitment to "price stability," a signal that he might not follow through with a push to lower rates like many expected as President Donald Trump's nominee.

"He is absolutely telling you that he plans on delivering on price stability. So that means ... we're not going to have such easy money policy as everybody thought maybe Chairman Warsh would do back in the first quarter of this year, when everyone was counting on rate cuts," DoubleLine Capital CEO Jeffrey Gundlach said on CNBC's "Closing Bell."  "He doesn't sound like that today at all."

— CNBC's Yun Li contributed reporting.