US stocks tumbled to one of their worst days of the year after the Federal Reserve hinted on Wednesday it might inject fewer shots of adrenaline into the US economy next year.

The S&P 500 fell 2.9%, just shy of its biggest loss for the year, to pull further from its all-time high set a couple weeks ago. The Dow Jones Industrial Average lost 1,123 points, or 2.6%, and the Nasdaq composite dropped 3.6%.

The Fed announced yesterday it is cutting its main interest rate for a third time this year, continuing the sharp turnaround begun in September when it started to lower rates from a 20-year high to support the US job market. That cut was already widely expected.

But a bigger question centres around how much more the Fed will cut next year. A lot rides on it, particularly after expectations for a series of cuts in 2025 helped the US stock market set an all-time high 57 times so far in 2024.

Fed officials released projections on Wednesday showing the median expectation among them is for two more cuts to the federal funds rate in 2025, or half a percentage point’s worth. That’s down from the four cuts expected just three months ago.

The US central bank has already eased its main interest rate by a full percentage point to a range of 4.25% to 4.50% since September.