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NEW YORK (AP) — U.S. stocks slumped Wednesday after the Federal Reserve said it may not cut interest rates next year by as much as it earlier thought, regardless of how much Wall Street wants it.

The S&P 500 was 0.8% lower in late trading. The Dow Jones Industrial Average was down 37 points, or 0.1%, at 34,479, as of 3:45 p.m. Eastern time, and the Nasdaq composite was 1.3% lower.

at its highest level in more than two decades, as was widely expected. Officials also indicated they may raise the federal funds rate once again this year, as the Fed tries to get inflation back down to its target of 2%, though Fed Chair Jerome Powell said it's close to hitting the peak, if not there already.

Perhaps more importantly for the market, Fed officials also suggested they may cut rates next year by only half a percentage point. Three months ago, they were penciling in a full percentage point of cuts in 2024. That could be a big negative for Wall Street, where investors crave rate cuts because they typically give a boost to prices for all kinds of investments.

Stocks initially held relatively steady following the release of the Fed's forecasts, before sliding later in the afternoon.

“As you move further and further away from the meeting, the message may sink in,� said Sameer Samana, senior global market strategist at Wells Fargo Investment Institute. “We very much expect the markets to be knocked a little bit off their axis by this.�

Powell, though, also stressed that forecasts could change as more data about inflation and the economy come in.

“Forecasters are a humble lot, with much to be humble about,� Powell said.

He said the Fed has already moved rates up very high very quickly, which now gives it the ability to take more time before making upcoming moves.

Treasury yields in the bond market perked higher after the Fed released its projections. They had already been climbing for months after strong reports on the U.S. economy suggested the Fed may need to keep interest rates higher for longer in order to fully drive down pressures on inflation.

The yield on the 10-year Treasury rose to 4.36% from less than 4.32% shortly before the Fed's announcement. It's near its highest level since 2007, though it's still down from 4.37% late Tuesday.

The two-year Treasury yield, which more closely tracks expectations for Fed action, jumped to 5.17% from 5.04% shortly before the Fed's announcement.

“Future meetings will be a tug-of-war between markets who want cuts and a Fed that is scared its job isn’t done,� said Brian Jacobsen, chief economist at Annex Wealth Management.

“The Fed is projecting it will hit its unemployment rate and inflation targets in 2026,� he said. “Markets are more impatient than that. One year is an eternity to traders, let alone two years.�

High rates hurt prices for all kinds of investments, and high-growth companies are typically among the hardest hit. Big Tech stocks were among the heaviest weights on the S&P 500, and Microsoft, Apple and Nvidia all fell at least 1.9%.

Stocks of several companies who just recently sold their stock on public markets for the first time also fell. Instacart dropped 8.2% as it gave back some of its gains from its first day of trading as a public stock.

Arm Holdings, another company recently off a highly anticipated initial public offering of stock, also fell. It lost 3.7%.

Shares of Klaviyo, which helps advertisers market over email and text messaging, rose 9.2% on their first day of trading.

On the winning side of Wall Street, shares of Textron climbed 5.9% for the biggest gain in the S&P 500 after it announced a deal where NetJets has the option to purchase up to 1,000 of its Citation business jets over the next 15 years.

Pinterest rose 4.5% after the company gave forecasts and recaps of its decisions at its investor day that pushed analysts to upgrade how high they think its stock could go.

Beauty products company Coty climbed 5% after it raised its forecasts for the year due to strong demand for its new Burberry Goddess fragrance and other products.

In stock markets abroad, the FTSE 100 in London rose 0.9% after a report showed U.K. unexpectedly in August to its lowest level since Russia launched its invasion of Ukraine.

Indexes were mostly weaker in Asia after data showed Japanese exports fell from year-ago levels for the second straight month. Exports to China sank 11%, as the world’s second-largest economy continues to underperform expectations.

Officials in in boosting growth but told reporters they were confident that a recovery was underway and that they had the capacity to ensure stability in financial markets.

Japan’s Nikkei 225 fell 0.7%, Hong Kong’s Hang Seng dropped 0.6% and stocks in Shanghai slipped 0.5%.

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AP Business Writers Yuri Kageyama and Matt Ott contributed.