Stocks slipped Wednesday as the market reacted badly after the Federal Reserve delivered no rate increase but underlined its anti-inflation resolve and threatened to keep higher rates for longer. The Dow Jones industrial average declined 0.2 percent, the S&P 500 fell 0.9 percent, and the Nasdaq dropped 1.5 percent. US Treasury yields and the dollar rose while oil prices retreated on the hawkish Fed.

Equities took a hit and US Treasuries sold off as the Fed upgraded its view of the economy and policy-makers scaled back estimates of likely rate cuts next year to 50 basis points from 100 basis points previously. Investors generally see the economy slowing headed into year end and appear skeptical of Fed Chair Jerome Powell's statement that he sees one or two rate increases this year. The CME FedWatch tool shows markets are priced for no action at the November or December Fed policy meetings.

The day's uptick in market interest rates weighed on growth stocks in particular, with megacaps including Amazon, Apple, Microsoft, and Tesla rolling over into the close with losses of 1.5 to 2.5 percent. Among sectors, communications services and information technology lagged while industrials, materials, and real estate held up relatively well.

Market Reflections track market reaction to the trading day's major events. Economic data, policymaker speeches, and company news are featured in this report as well as key indexes and financial instruments.

Understanding why markets respond as they do is fundamental for an investor. Market Reflections help explain how the day's events, news, and data impact the outlook for the economy and for market prices.