U.S. stocks plunged Tuesday a day ahead of the Federal Reserve’s expected interest-rate increase. The Fed is expected to hike rates at least 0.75% in an attempt to stifle inflation, which has drawn concerns from investors amid a potential recession.
The Dow Jones Industrial Average fell 313.45 points, or 1.01%, to 30,706.23. The S&P 500 dropped 43.96 points, or 1.13%, to 3,855.93, and the Nasdaq Composite was down 109.97 points, or 0.95%, to 11,425.05.
Aside from a three-day rally earlier this month, stocks have generally traded lower the last several weeks. The Fed kicked off its two-day policy meeting Tuesday and the Federal Open Market Committee is expected to announce a rate increase Wednesday.
Shares of Ford plunged on Tuesday. It was the automaker’s worst day in more than a decade. The company had warned Wall Street that it incurred an unexpected $1 billion in supplier expenses. Ford (F) shares fell $1.85, or 12.39%, to $13.08.
Meanwhile, shares of Carvana (CVNA) fell $2.48, or 7.41%, to $30.97, and shares of Etsy (ETSY) fell $7.81, or 6.99%, to $103.97.
Wall Street analysts expect a 0.75% hike, or 75 basis points, but speculation of a 100 bps increase fueled some of the selling Tuesday. Some analysts said a 100 bps increase would be too much.
“We think a 100 bps hike would unnerve Wall Street, as it would imply that the FOMC is overreacting to the data rather than sticking to its game plan, and would increase the likelihood that the FOMC will eventually overtighten and lessen the possibility of achieving a soft landing,” Sam Stovall, chief investment strategist at CFRA, said in a note to clients.