Recession fears are gripping Wall Street.

A day after the Federal Reserve announced its largest rate hike in decades, the Dow Jones Industrial Average sank more than 700 points to end below 30,000 points for the first time since January 2021.

Meanwhile, the S&P 500 slumped more than 3%, while the Nasdaq lost more than 4%.

The Fed on Wednesday raised interest rates by three-quarters of a percentage point, its biggest rate hike since 1994, as it escalates its fight against inflation.

Fed Chair Jerome Powell indicated the central bank was ready to deliver a similar sized increase at its next meeting in July, if needed, in order to cool down prices.

The rate hikes are bound to raise borrowing costs across the economy, from the cost of mortgages to bank loans.

The average rate for a 30-year fixed-rate mortgage is now at 5.78%. That is the highest it has been since 2008.

The impact of the rate hikes will take a while to filter through the economy, and that means markets could remain under pressure, extending a miserable year in Wall Street.

Both the S&P 500 and the Nasdaq are in bear market territory, when an index falls 20% or more from its recent high, and the Dow could soon join them in hitting that milestone.

"What is apparent is that the amount of uncertainty in the markets is very high," says Michael Purves, CEO of Tallbacken Capital Advisors. "This uncertainty is a natural reflection of the inherent conflicts embedded in central bank policy."

Shares of tech companies were especially hard hit. Microsoft closed down 3%, and Apple was 4.5% lower. The electric carmaker Tesla was off 8.5%.

Meanwhile, cryptocurrencies continued to tumble. Bitcoin is trading below $21,000. It's down more than 50% this year.

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