Wall Street closes down sharply Wall Street closes down sharply after Fed holds rates unchanged

Wall Street ended sharply lower Wednesday after the Federal Reserve held interest rates steady, with artificial intelligence-related chip stocks adding to recent declines ahead of quarterly reports from Microsoft and Meta Platforms and the Nasdaq 100 index marking an 11% drop from its June record high.

The Fed's widely expected decision to leave the benchmark interest rate in the 3.50% to 3.75% range drew dissents from three of the 12 members of the policy-setting Federal Open Market Committee who "preferred" a quarter-percentage-point hike at this meeting.

The benchmark S&P 500 declined 1.52% to 7,316.15 points, its lowest level in a month. The tech-heavy Nasdaq Composite declined 1.74% to 24,442.94 points - down about 9% from its June record high. The Dow Jones Industrial Average declined 2.19% to 51,594.14 points.

The Nasdaq 100 index dropped 2.1%, extending recent losses as investors unloaded AI-related stocks due to ongoing concerns about heavy capital spending. That index is composed of the Nasdaq exchange's most valuable nonfinancial companies.

Investors mostly expected the Fed to keep rates unchanged. Inflation run above the central bank's 2% target for more than five years, and up until last month it accelerated as the war in the Middle East pushed up global fuel and food prices.

Investors worry that major U.S. companies are deepening a web of AI-linked investments and continuing to funnel billions into the emerging technology at the expense of free cash flow.

Meta Platforms dropped 4% in extended trade after the social media company said it now expects 2026 capital expenditure to be between $130 billion and $145 billion, compared with its prior forecast of $125 billion to $145 billion.

Also after the bell, Microsoft climbed 0.6% after it topped Wall Street estimates for quarterly cloud revenue growth, a sign its massive spending on AI infrastructure is paying off.

AI-related chipmakers added to recent losses after a sixfold jump in SK Hynix's quarterly profit fell short of lofty investor expectations. The South Korean company's shares fell 10%.

AI infrastructure company Vertiv slumped 17% after missing quarterly revenue expectations.

Eight of the 11 S&P 500 sector indexes declined, led lower by industrials, down 3.24%, followed by a 2.5% loss in information technology.

Ford Motor gained 2.1% after raising its annual profit outlook for a second time this year. Lennox tumbled 21% after the HVAC solutions maker lowered its annual profit forecast.

Visa rose 0.6% after the company beat estimates for quarterly profit, helped by World Cup-fueled travel demand.