Stock markets closed with significant losses on Wednesday, even as the Federal Reserve closed near-zero interests amid unusual trading activity fueled by online amateur investors.
The Dow Jones Industrial Average lost 635 points, or 2.1 percent, the biggest drop in the past three months, while the S&P 500 wiped out its profit for the year, by 98.8 points or 2.6 percent.
Federal Reserve Chairman Jerome Powell dismissed the declines, which boosted additional fiscal support and raised concerns that it would lead to an increase in inflation.
President Biden is campaigning for a $ 1.9 billion COVID-19 relief package.
But the markets, which have been growing steadily since the original shock of the pandemic early last year, have a downturn amid an unusual phenomenon of amateur investors targeting certain stocks, sending their valuations through the roof, sending short sellers upset.
Companies like GameStop have seen their valuations rise and fall at extraordinary rates as online investment boards target sites like Reddit. GameStop’s value has risen sixfold since the beginning of the year. Major hedge funds betting that the shares would fall have been backed into a corner and likely built up significant losses.