Nasdaq falls over 2% with tech stocks hit by Fed's signal for accelerated rate hikes

• US stocks ended lower Thursday with the Nasdaq Composite erasing its post-Fed meeting gain.
• Tech stocks paced the market's reversal as investors considered the Fed potentially raising rates three times in 2022.

US stocks closed lower Thursday, with tech stocks leading a retreat in the market as investors considered the impact of the Federal Reserve's aggressive pace of interest-rate increases as it combats high inflation.

The tech-concentrated Nasdaq Composite was down over 3% during the session and closed lower by 2.47%, wiping out its gains from the previous session. US stocks on Wednesday and early Thursday moved higher after the Fed indicated the US economy could withstand higher interest rates even in the face of risks from Omicron or other potential coronavirus virus variants.

The Fed signaled it may raise interest rates at least three times in 2022 to cool the hottest inflationary environment in nearly 40 years.

Investors on Thursday knocked down high-growth tech stocks such Apple and Amazon while investors rewarded financial stocks as banks stand to benefit from interest rates.

Here's where US indexes stood at 4:00 p.m. on Thursday:

• S&P 500: 4,668.66, down 0.87%
• Dow Jones Industrial Average: 35,897.64, down 0.08% (29.79 points)
• Nasdaq Composite: 15,180.43, down 2.47%

The Bank of England on Thursday surprised markets by raising the UK's benchmark rate to 0.25% from 0.1%, making that move after inflation hit a 10-year high in November. Also Thursday, the Bank of Mexico issued a larger-than-expected rate hike of 0.5% to 5.50% with inflation sitting at a nearly 20-year high.

"Inflation is clearly front and center on central bankers' minds, far more than any economic drag from Omicron," said Ajay Rajadhyaksha, head of macro research at Barclays Plc, in a note.

Around the markets, economist Mohamed El-Erian said some Fed policymakers might be wishing they'd been a bit more aggressive about pulling back on monetary stimulus.

Reddit, whose message boards became the go-to destination for day traders during this year's meme stock frenzy, has confidentially filed for an initial public offering in the US.

Oil prices rose. West Texas Intermediate crude gained 1.5% to $71.96 per barrel. Brent crude, the international benchmark, fell 0.4% to $74.69.

Gold gained 1.9% to $1,796.90 per ounce. The 10-year yield fell 4 basis points to 1.417%.

Bitcoin fell by 2.7% to $47,900.