U.S. stocks dropped on speculation the Federal Reserve may raise interest rates this year to keep a lid on inflation.

The S&P 500 slumped 1.2% Wednesday after the Fed released projections showing nearly half its policymakers foresee at least one increase to its main interest rate this year. The Dow Jones Industrial Average went from a gain of 0.5% in the morning to a drop of 1%, while the Nasdaq composite sank 1.3%.

Treasury yields climbed on rising expectations for a hike to rates in 2026. Higher rates can tap the brakes on inflation, but they also slow the economy and hurt prices for investments.

On Wednesday:

The S&P 500 fell 91.25 points, or 1.2%, to 7,420.10.

The Dow Jones Industrial Average fell 507.12 points, or 1%, to 51,492.55.

The Nasdaq composite fell 354.69 points, or 1.3%, to 26,021.66.

The Russell 2000 index of smaller companies fell 21.21 points, or 0.7% to 2,917.98.

For the week:

The S&P 500 is down 11.36 points, or 0.2%.

The Dow is up 290.29 points, or 0.6%.

The Nasdaq is up 132.81 points, or 0.5%.

The Russell 2000 is down 26.01 points, or 0.9%.

For the year:

The S&P 500 is up 574.60 points, or 8.4%.

The Dow is up 3,429.26 points, or 7.1%.

The Nasdaq is up 2,779.67 points, or 12%.

The Russell 2000 is up 436.07 points, or 17.6%.