Financial markets on Wednesday priced an 18% chance of a 100 basis point hike in the target federal funds rate, according to CME’s FedWatch tool.
The Dow Jones Industrial Average fell 139.4 points, or 0.45%, to 30,822.42, the S&P 500 lost 28.02 points, or 0.72%, to 3,873.33 and the Nasdaq Composite fell 103.95 points, or 0.9%, to 11,448.40.
Nine of the 11 major S&P 500 sectors ended in negative territory, with energy and industrials suffering the biggest percentage declines.
Dow Transportation, considered a barometer of economic health, fell 5.1%.
The decline was led by FedEx shares which fell 21.4%, the biggest drop in the S&P 500.
Peers United Parcel Service and XPO Logistics fell 4.5% and 4.7%, respectively, while Amazon.com fell 2.1%.
The session also marked the expiration of monthly options, which occurs on the third Friday of every month. Options hedging activity has amplified market movements this year, contributing to increased volatility.
The CBOE Market Volatility Index, often referred to as the “fear index”, hit a two-month high, above a level associated with heightened investor anxiety.
Falling issues outnumbered rising ones on the NYSE by a ratio of 3.04 to 1; on the Nasdaq, a 2.24-to-1 ratio favored decliners.
The S&P 500 posted no new 52-week highs and 56 new lows; the Nasdaq Composite recorded 21 new highs and 387 new lows.
Volume on U.S. exchanges was 16.92 billion shares, compared to an average of 10.72 billion for the full session over the past 20 trading days.