Stocks ended lower in bumpy trading on Wall Street after the Federal Reserve raised its benchmark interest rate in its fight against inflation and signaled that more hikes lay ahead. As expected, the central bank raised its key short-term rate by half a percentage point Wednesday, marking its seventh increase this year. The Fed also said it expected to raise rates higher over the coming few years than it had previously anticipated. The S&P 500 lost 0.6% after giving up an earlier gain of 0.9%. The Dow Jones Industrial Average fell 0.4% and the Nasdaq composite gave back 0.8%.

Stocks turned lower on Wall Street and Treasury yields rose in afternoon trading Wednesday after the Federal Reserve raised its benchmark interest rate and signaled more hikes ahead.

As expected, the central bank raised its key short-term rate by 0.50 percentage points, marking its seventh hike this year. The latest hike is smaller than the previous four 0.75 percentage point increases and comes a day after an encouraging report showed that inflation in the U.S. slowed in November for a fifth straight month.

Recent signs that inflation, while still painfully high, has eased had stoked optimism on Wall Street that the Fed might signal the possibility of rate cuts in the second half of next year. But during a press conference following the Fed’s two-day meeting of policymakers, Fed Chair Jerome Powell emphasized that the full effects of the central bank’s efforts to slow the economy to bring down inflation have yet to be fully felt.

“The inflation data received so far for October and November show a welcome reduction in the monthly pace of price increases, but it will take substantially more evidence to give confidence that inflation is on a sustained downward path,” Powell said.

Stocks had rallied ahead of the Fed’s afternoon announcement, but shed those early gains. The S&P 500 was down 0.8% as of 3 p.m. Eastern. The Dow Jones Industrial Average fell 234 points, or 0.7%, to 33,879, and the Nasdaq was 0.9% lower.

Bond yields, which had been mostly lower before the Fed announcement, also turned higher. The yield on the 10-year Treasury, which influences mortgage rates, rose to 3.52% from 3.50% from late Tuesday. The two-year yield, which more closely tracks expectations for the Fed, rose to 4.27% from 4.22% late Tuesday.

The latest increase brings the Fed’s key federal funds rate to a range of 4.25% to 4.5%, its highest level in 15 years. Fed policymakers forecast that the cental bank’s rate will reach a range of 5% to 5.25% by the end of 2023.

That suggests the Fed is prepared to raise rates by an additional 0.75 percentage points next year.

The Fed also signaled it expects its rate will come down by the end of 2024 to 4.1%, and drop to 3.1% at the end of 2025.

“This is considerably higher than expectations priced into financial markets, which are positioned for the federal funds rate to come back down to 3.9% at the end of 2023 and to 2.6% at the end of 2024,” said Bill Adams, chief economist for Comerica Bank.

Higher rates heighten the costs of many consumer and business loans and the risk of a recession. Investors had been hoping that the Fed would ease up on its aggressive interest rate increases as it tries to slow the economy and tame inflation. Other central banks around the world, including the European Central Bank, are also likely to raise their own rates by half a percentage point this week.

On Tuesday, the U.S. government reported that inflation slowed more than economists expected in November. It is another sign that inflation is easing and has given Wall Street hope that the Fed might be able to take its foot off the brakes on the economy sooner than expected and possibly avoid a recession.

Wall Street is also closely watching economic reports on consumer spending and employment, which remain strong. That has made it more difficult for the Fed to tame inflation while also helping to protect the slowing economy from a possible recession.

The U.S. will release its weekly report on unemployment benefits on Thursday, along with retail sales data for November.

Technology stocks, which had led stocks higher in the early going, were among the biggest drags on the market in afternoon trading. Apple fell 2.2%.

Retailers and banks also fell. Best Buy dropped 4% and Goldman Sachs slid 2.4%.

Delta Air Lines rose 1.7% after it raised its fourth-quarter financial outlook and issued an optimistic forecast for 2023.

Markets in Asia were higher and European markets were mostly lower.