Stock markets closed on Wednesday with significant losses, even though the Federal Reserve kept interest rates locked near zero amid unusual trading activity fueled by amateur online investors.
The Dow Jones industrial average lost 635 points, or 2.1 percent, the biggest drop in three months, while the S&P 500 erased earnings for the year, down 98.8 points or 2.6 percent. .
The declines were not discouraged by Federal Reserve Chairman Jerome Powell, who backed additional fiscal support and dismissed concerns that inflation would rise.
President Biden is pushing for a $ 1.9 trillion COVID-19 aid package.
But markets, which have risen steadily since the initial shock of the pandemic hit early last year, have fallen amid an unusual phenomenon of amateur investors targeting certain stocks and sending their valuations through the roof, upsetting short sellers.
Companies like GameStop have seen their ratings rise and fall at extraordinary rates, as online investment advice from sites like Reddit has targeted them. The value of GameStop has increased sixfold since the beginning of the year. Major hedge funds that bet that stocks would decline were held in a corner and probably accumulated significant losses.