Stocks Drop on Fed Uncertainty and Warsh Stance; Microsoft Jumps on Earnings

Stocks fell sharply on Wednesday as traders wrestled with the Federal Reserve's decision to leave interest rates unchanged, despite futures markets pricing in a roughly 30% chance of a hike. The FOMC held its target rate steady, but the lack of clear guidance on future moves fueled uncertainty.

Adding to the pressure were comments from former Fed Governor Kevin Warsh, who reiterated his long-standing opposition to central bank forward guidance. Investors interpreted the no-guidance stance as a signal that policymakers may remain reactive rather than proactive.

In contrast, Microsoft Corp. shares surged after the company reported results that exceeded analysts' expectations. The tech giant's strong performance provided a bright spot in an otherwise downbeat session.