By Caroline Valetkevitch

NEW YORK (Reuters – U.S. shares fell sharply after minutes from the U.S. Federal Reserve meeting indicated that central banks may need to raise interest rates sooner then expected.

After the minutes, investors saw The and Nasdaq as being more hawkish that they had expected. After hitting a record-breaking high earlier in day, the Dow reversed its course and closed lower.

More details were provided in the minutes of the Fed’s December 14-15 policy meeting. They provide more detail on central bank’s recent shift toward tighter monetary policies to reduce inflation. Last month, policymakers stated that the U.S. labor force was “very tight”.

“This shift towards hawkishness is greater than we anticipated. According to David Carter, Lenox Wealth Advisors’ chief investment officer in New York, this shift toward hawkishness may be problematic for stock and bond markets.

The S&P 500 technology sector was the biggest drag on the S&P 500, while rate-sensitive real estate sector led declines among sectors.

According to preliminary data, the S&P 500 lost 92.86 points, or 1.94%, to end at 4,700.49 points, while the Nasdaq Composite lost 524.89 points, or 3.36%, to 15,097.83. The Dow Jones Industrial Average fell 387.47 points, or 1.05%, to 36,412.18.

Higher interest rates can increase the cost of borrowing for consumers and businesses. Stock multiples can be depressed by higher rates, particularly for tech and growth stocks.

The S&P 500 financials index also ended lower, a day after it registered an all-time closing high.

Policymakers had agreed to hasten the end of their pandemic-era program of bond purchases, and issued forecasts anticipating three quarter-percentage-point rate increases during 2022.