US stock markets closed sharply lower on Wednesday, with the Dow Jones Industrial Average falling 2.19% following the Federal Reserve's decision to maintain its benchmark interest rate in the 3.5% to 3.75% range.
The Nasdaq Composite mirrored the decline, dropping 2.2% as traders adjusted positions in response to the central bank's policy stance.
The sell-off reflects a defensive shift among investors who had anticipated a more dovish signal or a clearer path toward future easing.
By holding rates steady, the Fed has reinforced the higher-for-longer narrative, pressuring rate-sensitive sectors and growth stocks that rely on lower borrowing costs to justify valuations.
The move underscores the central bank's cautious approach amid persistent inflationary pressures and mixed economic data.
This development follows a period of heightened volatility, with markets already retreating ahead of the decision.