The US stock market experienced a sharp sell-off on Wednesday following the Federal Reserve chairmanship Jerome PowellCNBC’s comments triggered what CNBC said Jim Cramer described as an “incredible panic” in the markets.

What happened: “People throw away the good and the bad.” “Typical index fund behavior,” Cramer wrote on X, specifically pointing to concerns about the performance of small-cap stocks. “And all those people who loved the small caps (the Russell 2000?), now what?”

The market reaction came after Powell announced a 25 basis point rate cut to 4.25% to 4.5%, while also announcing only two possible rate cuts in 2025 – fewer than the four forecast in September.

The selloff was widespread and profound, with the Dow Jones Industrial Average, tracked by the SPDR Dow Jones Industrial Average ETF SLIDE plunged 2.48% to close at 42,326, marking its worst daily decline since September 2022.

The S&P 500 Index – tracked by SPDR S&P 500 ETF Trust SPY fell 2.9% to 5,872, while the tech-heavy Nasdaq 100, tracked by Invesco QQQ Trust QQQfell 3.6% to 21,209.

Small-cap stocks as measured by iShares Russell 2000 ETF IWMbore the brunt of the selling pressure, falling 4.4% to 2,231, completely erasing their post-election gains.

See also: Micron Technology, Quantum Corporation, Meta, Amazon, Tesla: Why These 5 Stocks Are on Investors’ Radar Today

Why it matters: The “Magnificent Seven” technology stocks collectively lost over $600 billion in market value Tesla Inc. TSLA The decline peaked at a drop of 8.2%.

Powell described the Fed’s approach as the start of a “new phase” of monetary policy and emphasized a more cautious stance on future rate cuts. The Fed now forecasts inflation will reach 2.5% in 2025, up from its previous estimate of 2.1%.

The market fear was reflected in the CBOE volatility indexwhich rose 58% to 25, while the US dollar climbed to its highest level in two years. Bitcoin BTC/USD fell 5.32% to trade just below $100,000, and gold fell 2.1% to $2,580 an ounce.

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Disclaimer: This content was created in part using AI tools, and was reviewed and published by Benzinga editors.