The Dow plunges 1,100 points after the Fed scales back its interest rate cutting plans

The stock market plunged on Wednesday after the Federal Reserve cut its expectations for interest rate cuts next year.

The Dow Jones Industrial Average fell about 1,100 points, or 2.5%, the index’s sharpest decline since August. The decline marked the 10th consecutive day of losses for the Dow, its longest losing streak since 1974.

The SThe &P 500 fell nearly 3%, while the tech-heavy Nasdaq fell about 3.5%.

The Fed cut interest rates by a quarter of a percentage point on Wednesday, but the central bank also announced a new forecast that called for fewer rate cuts than expected just a few months ago.

The Fed’s forecast Wednesday said it expects only half a percentage point rate cuts next year and another half a percent cut in 2026. In September, the Fed had forecast interest rate cuts of one percentage point next year and another cut of another half a percent in 2026.

Lower interest rates typically stimulate long-term economic activity, ensure continued economic growth and secure the labor market. They also tend to drive up corporate profits and stock prices.

At a news conference Wednesday in Washington, D.C., Fed Chairman Jerome Powell said the central bank may be slower to cut rates in the future, in part because it has since cut interest rates significantly.

Powell also said a recent resurgence in inflation has influenced the Fed’s expectations, noting that some policymakers believe the uncertainty is tied to possible policy changes under Trump.

“Common sense suggests that you slow down a little when the path is uncertain,” Powell said. “It’s no different than driving on a foggy night or walking around in a dark room full of furniture.”