U.S. stocks closed decidedly lower Wednesday, after Federal Reserve Chairman Jerome Powell’s press conference that followed the central bank’s decision to raise interest rates by 25 basis points, while lowering the median forecast for rate hikes in 2019 to two hikes from three previously.

The Dow Jones Industrial Average DJIA, +0.19% fell 351.98 points, or 1.5%, to 23,323.66, while the S&P 500 index SPX, +0.29% fell 39.2 points, or 1.5%, to 2,506.96. The Nasdaq Composite Index COMP, +0.36% tumbled 147.08 points, or 2.2%, to 6,636.83.

At its highs early Wednesday, the Dow had risen 381.7 points, the S&P was up 39.13 points, while the Nasdaq had advanced 84.95 points at its peak.

At its lows Wednesday afternoon, the Dow had fallen 513 points, the S&P 57.2 points, while the Nasdaq fell as much as 197.41 points at its nadir.

What drove the market?

U.S. stocks fell sharply after the Fed announced its fourth interest-rate increase of the year, hiking the federal funds rate by 25 basis points to a range of 2.25% to 2.5%, and deepened those losses during a press conference where Powell explained the decision and accompanying forecasts.

Recap:Fed interest-rate decision and Powell press conference

The policy statement was perceived as slightly more dovish than the central bank’s previous stance, as it modified its language to suggest it may be less aggressive in raising rates next year, while a survey of FOMC members shows the median voter expects two more rate hikes next year, rather than three hikes predicted at the Fed’s September meeting.

That said, the central bank left the necessity for “some further gradual increases” in the language of its policy statement.

Investors were expecting the rate hike, though some, including the Wall Street Journal’s editorial page as well as President Donald Trump, called for the Fed to pause amid signs of slowing economic growth.

Earlier, U.S. Treasury Secretary Steven Mnuchin gave investors reason for optimism regarding U.S.-China trade relations, when he said the U.S. and China will meet in January to broker a trade-war truce, in an interview with Bloomberg News on Tuesday. Previously, the Trump administration hadn’t given a specific timetable for face-to-face negotiations.

What did strategists say?

“The big takeaway for markets is that the Fed lowered its growth and inflation forecasts” for 2019 and beyond, at the same time that it continued to raise interest rates and otherwise tighten financial conditions, Matthew Bartolini, head of SPDR Americas research at State Street Global Advisors, told MarketWatch.

“The Fed is talking out of two sides of its mouth, and that just creates more uncertainty,” he added. “It’s telling the market it thinks growth will slow in the future while raising its forecast for unemployment in 2020, signaling they think there will be economic turmoil just 18 months from now.”

Powell’s press conference merely confirmed the bearish tone of the Fed’s economic forecast, Bartolini said. “It wasn’t a very positive delivery of the news. There was a lot of talk about cross-currents and headwinds from abroad,” or talk that one would expect to accompany a decision to keep rates where they are, rather than raising them, he said.

“I would characterize the Fed’s statement as dovish, but perhaps not as dovish as the market hoped,” said Peter Berezin senior vice president of global investment strategy at BCA research.

Investors are likely worried by the fact that the Fed declined to lower its estimates for where interest rates will be in 2020 and 2021. “What the Fed is saying is that they will eventually take monetary policy into restrictive territory. When that happens, the unemployment rises, and then usually you get a recession.”

Nevertheless, Berezin argued that traders likely initially overlooked the fact that FOMC members lowered their estimates for where interest rates will eventually settle, a dovish change that Berezin didn’t expect.

What stocks were in focus?

Shares of FedEx Corp. FDX, +1.16% closed 12.2% lower Wednesday, after the logistics company announced Tuesday evening that it was lowering its guidance for 2019 and that it was starting a voluntary buyout program for some U.S. workers.

Facebook Inc. FB, +0.20% stock was in focus after the New York Times reported that the company shared user data with large tech companies to a greater degree than it had previously disclosed. The stock fell 7.3% Wednesday.

Pfizer Inc. PFE, -0.66% shares retreated 1%, after the firm announced a plan to combine its consumer health unit with that of GlaxoSmithKline PLC GSK, -1.08% , with Pfizer taking a minority stake in the new enterprise.

Shares of Micron Technology Inc. MU, -0.76% closed 7.9% lower Wednesday, after the chip maker lowered its fiscal second-quarter outlook Tuesday evening.

General Mills Inc. GIS, +1.69% shares rose 5%, after the consumer foods company reported an earnings beat earlier in the morning.

Shares of Medtronic PLC MDT, -1.10% fell 0.8% Wednesday, after the firm announced the completion of a $1.7 billion deal to acquire Mazor Robotics.

Eli Lilly and Co. LLY, -0.66% stock rose 2.5%, after the pharmaceutical company issued optimistic 2019 guidance and raised its dividend by 15%.

What data were in focus?

Existing home sales rose 1.9%, to a seasonally adjusted annual rate of 5.32 million from October to November, according to the National Association of Realtors, surpassing economists’ expectations of 5.17 million, per a MarketWatch poll.

The Commerce Department reported that the U.S. trade deficit increased to $124.8 billion in the third quarter, up from $101.2 billion the second quarter of 2019.

How did the benchmarks trade yesterday?

During a volatile day of trade Tuesday, the Dow finished up 0.4% to 23,675.64, while the S&P 500 index rose less than a point to close at 2,546.16. The Nasdaq Composite Index climbed 0.5% to 6,783.91.

How did other markets trade?

Asian markets were a mixed bag, with Japan’s Nikkei NIK, -1.10% shedding 1% and China’s Shanghai Composite Index SHCOMP, -1.72% off 0.4%.

In Europe, stocks closed mostly higher, with both the Stoxx Europe 600 SXXP, -1.02% and FTSE 100 UKX, -1.29% advancing on the day.