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Stocks sink in wild day after hawkish Fed signals

The New York Stock Exchange.Peter Morgan/Associated Press

Stocks saw some crazy gyrations, with traders overwhelmed by the many headlines following the Federal Reserve decision and Jerome Powell’s press conference that ended up signaling at least two things: policy will remain aggressively tight and the odds of a soft landing look increasingly elusive.

The S&P 500 ended near session lows — pushing its slide from a January record to more than 20%. The gauge struggled to find direction in the aftermath of the Fed announcement, climbing as much as 1.3% at one point. The two-year rate topped 4%, piercing that mark for the first time since 2007. The dollar rallied.

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Fed Chair Jerome Powell said officials were "strongly committed" to curbing inflation after they raised interest rates by 75 basis points for a third straight time and signaled a potential move of that magnitude in November. Powell said his main message was that officials were "strongly resolved" to bring inflation down to the Fed's 2% goal and added that "we will keep at it until the job is done." The phrase invoked the title of former Fed chief Paul Volcker's memoir "Keeping at It."

“Jerome Powell almost channeled his inner Paul Volcker today, talking about the forceful and rapid steps the Fed has taken, and is likely to continue taking, as it attempts to stamp out painful inflation pressures and ward off an even worse scenario later down the line,” said Seema Shah, chief global strategist at Principal Global Investors. “With the new rate projections, the Fed is engineering a hard landing — a soft landing is almost out of the question.”