Dow plunges 1,100 points after Fed holds interest rates steady

Stocks tumbled Wednesday after the Federal Reserve left interest rates unchanged, sending all three major U.S. indexes sharply lower.

(CNN)- Stocks tumbled Wednesday after the Federal Reserve left interest rates unchanged, sending all three major U.S. indexes sharply lower.

The Dow Jones Industrial Average plunged more than 1,100 points, marking its worst day in more than a year.

The bond market also showed growing concern among investors, with the reaction potentially putting additional upward pressure on mortgage rates.

Business reporter David Goldman said the market is signaling concern about inflation and warned consumers could see mortgage rates tick higher.

Federal Reserve Chairman Kevin Warsh acknowledged inflation remains above the central bank’s 2% target and pledged the Fed would work to restore price stability.

“Inflation remains elevated relative to the committee’s 2% goal,” Warsh said. “We will deliver price stability.”

But investors were left with questions about how the Fed plans to accomplish that goal, contributing to the sharp market reaction.

President Donald Trump defended Warsh following the decision, calling him “fantastic” while noting that interest rate decisions are made by the Federal Reserve board.

The market reaction comes as investors continue weighing inflation, interest rates and the outlook for the U.S. economy.