US stocks sank on Wednesday as the Federal Reserve decided to hold interest rates steady in its first decision under new Chairman Kevin Warsh, but also pointed to an increasing likelihood of rate hikes later this year.

The tech-heavy Nasdaq Composite (^IXIC) and S&P 500 (^GSPC) both slid by over 1%, while the Dow Jones Industrial Average (^DJI) gave up nearly 1%, or around 500 points. The moves came a day after the Dow closed at a record high amid progress around the US-Iran peace deal.

Pushing US equities to the downside was news that nine out of 18 FOMC members who submitted economic projections — with Warsh as the sole member sitting out — see a rate hike coming by the end of the year. The projections pushed traders to fully price in one quarter-point hike by year-end, per Bloomberg data.

Policymakers had projected one 2026 rate cut in March, but the job market has firmed, and inflation has risen to the highest level in three years, pushed up by higher energy prices from the conflict in the Middle East.

Investors are also debating whether the blocked oil flows through the Strait of Hormuz could be cleared quickly, as they weigh the US-Iran interim deal to end their conflict. After agreeing on a draft 14-point memorandum, the two sides aim to formally sign an agreement on Friday.

But President Trump said the memo wasn't final and the US could "go right back to dropping bombs right smack in the middle of their head" if he didn't like it, speaking at the G7 summit on Wednesday.

Meanwhile, SpaceX (SPCX) turned over 3% lower, poised to snap a post-IPO rally that has seen the Elon Musk-led rocket company eclipse Amazon (AMZN) in market value in just three days of trading.

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