The Federal Reserve lifted rates by 25 basis points to 4%, triggering a market sell-off as investors brace for further tightening to curb stubborn inflation.
The Dow closed over 600 points lower, falling 1.2%, after the Fed's rate hike.
The S&P 500 dropped 0.4% as investors reacted to the Fed's hike and dot plot.
The dollar index gained after the Fed's dot plot signaled further policy tightening.
Bitcoin prices gained as the Fed's projections showed higher inflation expectations.
The Nasdaq Composite was little changed following the Fed announcement.
The Federal Reserve unanimously raised interest rates by 25 basis points to a range of 3.75%-4.00% to combat persistent inflation. Markets reacted negatively, with the Dow falling 1.2% as Chairman Kevin Warsh signaled a continued focus on price stability despite White House pressure.
Stocks declined as the Fed's dot plot projections suggested further rate hikes may be necessary this year to combat inflation, causing bond yields to rise.