# Dow drops 631 points as Fed hikes rates for first time in years

> The Federal Reserve raised rates 25 basis points, sending stocks lower as Chair Kevin Warsh pledged to fight inflation.
- Title: Dow drops 631 points as Fed hikes rates for first time in…
- Summary: The Federal Reserve raised rates 25 basis points, sending stocks lower as Chair Kevin Warsh pledged to fight inflation. The Fed's first rate hike in three…
- Keywords: federal reserve, fed, fomc, kevin warsh, interest rates, rate hike, inflation, dow jones, s&p 500, nasdaq, stock market, monetary policy
- Source: Kiplinger — https://kiplinger.com/investing/stocks/dow-falls-631-points-after-fed-hikes-rates-stock-market-today
- Published: 2026-09-16T20:12:05+00:00
- Read time: 1 min
- Topics: federal reserve, fed, fomc, kevin warsh, interest rates, rate hike, inflation, dow jones, s&p 500, nasdaq, stock market, monetary policy
## Fed hikes rates, stocks tumble
The Federal Reserve raised interest rates by 25 basis points Wednesday, its first hike in three years. The Dow fell 631 points, or 1.2%.
## Warsh pledges price stability
Fed Chair Kevin Warsh said the unanimous decision shows the committee's commitment to stable prices. He reiterated that pledge despite questions about political pressure.

> I said we will deliver stable prices. Today's decision is consistent with that.
## Economy strong but inflation elevated
The Fed noted solid economic expansion and resilient domestic spending. However, inflation remains elevated and uncertainty is high due to geopolitical developments.

> Inflation remains elevated.
## One more hike expected this year
The federal funds rate now sits at 3.75% to 4.00%. The Fed's projections show members expect one more rate increase before year-end.
## History suggests markets can recover
After past rate hikes following six-month pauses, the S&P 500 gained an average of 5.5% over the next 12 months. The average drawdown was 9.4%.
## Retail sales beat expectations
August retail sales jumped 1.2%, exceeding forecasts of 0.7%. The strong consumer spending could put more pressure on inflation going forward.
## OpenAI seeks trillion-dollar valuation
OpenAI is in talks with investors about a funding round valuing the ChatGPT maker at over $1.2 trillion. The company now has 1 billion active users.
## OpenAI delays IPO plans
CEO Sam Altman told Fortune that OpenAI will postpone its anticipated IPO. He cited safety concerns as making now an ill-advised moment to go public.

> Given everything happening with safety, right now would be an ill-advised moment to go public, and we don't feel pressure on that.
## J.B. Hunt plunges on fuel costs
The trucking company fell 13.3% after warning that diesel fuel costs will drive earnings down 5% to 10% this quarter. National diesel prices hit a record $6.31 per gallon.
## Key takeaway

The Fed's first rate hike in three years signals a renewed focus on fighting inflation, though history shows markets often recover after similar moves.