The Dow Jones Industrial Average sank deeper into the history books on Wednesday, with the index posting its 10th straight losing day as a disappointing rate outlook by the Federal Reserve rocked the stock market.

The Dow lost 1,123.03 points, or 2.58%, to 42,326.87, for its worst losing streak since an 11-day slide in 1974. The Wednesday decline was its worst since August and only the second time it lost 1,000 points this year in one session. The S&P 500 lost 2.95% to 5,872.16 and the Nasdaq Composite shed 3.56% to 19,392.69 with losses intensifying into the close of trading.

The central bank reduced its overnight borrowing rate by a quarter point to a target range of 4.25% to 4.5%, as expected. However, the Fed indicated Wednesday afternoon it would only cut rates twice in 2025, fewer than the four cuts given in its last forecast. Fed Chair Jerome Powell said the central bank's move to cut rates in recent months allows it to "be more cautious as we consider more adjustments to our policy rate."

Before Wednesday, traders were hoping the Fed would stay aggressive with rate cuts in 2025, fueling the bull market further. Treasury yields jumped following the Fed's cautious outlook, pressuring share prices. The 10-year Treasury yield crossed above 4.50%.

"Risk assets and a very highly valued stock market doesn't like the idea that rate cuts are less likely on both sides of the mandate," DoubleLine Capital CEO Jeffrey Gundlach said on CNBC's "Closing Bell." "The takeaway that I got from that press conference was there's not going to be an aggressive cutting cycle ... and the market is pretty much in sync with that."

The Dow's losing streak began the session after it closed above 45,000 for the first time ever on Dec. 4. The total losses for the Dow during its losing streak have totaled 6%.

"Good-bye punch bowl. No Christmas cheer from the Fed. Policymakers see higher inflation and lower unemployment in 2024. There is simply no reason to be dovish given that outlook," said David Russell, global head of market strategy at TradeStation. "The easy lifting is done now that rates are no longer clearly restrictive. It's a logical time to pause."

Before it intensified on Wednesday, the Dow's worst funk in decades was mostly caused by a rotation out of old economy shares and into technology stocks, a sector that the century-old measure underweights compared to broader market metrics.

But the whole market was rocked on Wednesday. The S&P 500's loss was also its worst since August and cut its 2024 gain to 23%.

Stocks close lower

Stocks closed lower on Wednesday, with the Dow Jones Industrial Average notching its first ten-day losing streak since 1974, after Federal Reserve Chair Jerome Powell signaled less rates in 2025 than previously forecast.

The 30-stock Dow plummeted 1,123.03 points, or 2.58%, to close at 42,326.87. The S&P 500 pulled back 2.95% to 5,872.16, while the Nasdaq Composite finished the session 3.56% lower at 19,392.69.

— Brian Evans

Broadcom, megacap technology stocks among biggest Nasdaq laggards

Broadcom and Magnificent Seven stocks with the exception of Nvidia were among the biggest laggards on the Nasdaq-Composite, contributing to the tech-heavy index's 2.4% loss.

Broadcom shares shed 7%, while Tesla dropped 8%. Microsoft, Meta Platforms and Alphabet sank about 2%, while Amazon dropped 3%. Apple declined about 1%. Other significant losers included Netflix and Palo Alto Networks.

Nvidia bucked the trend, edging up 0.4%.

— Samantha Subin

All 11 S&P 500 sectors on track to close lower

The selloff was broad-based, with all 11 S&P 500 sectors trading in negative territory following the Federal Reserve's decision to cut interest rates by a quarter point.

The pullback was led by consumer discretionary and real estate, with those sectors falling around 4% and about 2.9%, respectively. Information technology and communication services were each down around 2.4%, while financials, materials and industrials were lower by around 2%.

Moreover, about nine out of every 10 S&P 500 members were on track to end the session in the red.

— Sean Conlon, Alex Harring

Small-cap Russell 2000 drops 3%

Small-cap benchmark Russell 2000 slipped 3% to its session low after the Federal Reserve signaled caution of future rate cuts. The benchmark is on track for its worst day since Sep. 3

The Russell 2000 just had a banner November with a 10.8% gain as investors bet Donald Trump's election would be good for small, domestic-oriented companies.

— Yun Li

Dollar index poised for highest closing since 2022

The Dollar Index is on track to end Wednesday at its highest closing level in more than two years.

The index last traded around the 108 level. With that action, the index could conclude at its highest closing point since Nov. 10, 2022, when it finished at 108.21.

— Alex Harring, Nick Wells

Market-moving Powell quotes so far

Federal Reserve Chairman Jerome Powell addressed the press after the central bank disappointed the market by forecasting just two rate cuts next year.

Here are some of the key quotes by Powell during his press conference so far:

• "With today's action, we have lowered our policy rate by a full percentage point from its peak, and our policy stance is now significantly less restrictive. We can therefore be more cautious as we consider further adjustments to our policy rate."
• "I think the actual cuts that we make next year will not be because of anything we wrote down today. We're going to react to data; that's just the general sense of what the committee thinks is likely to be appropriate."
• "I would say today was a closer call, but we decided it was the right call because we thought it was the best decision to foster achievement of both of our goals."
• "As we think about further cuts, we're going to be looking for progress on inflation... We have been moving sideways on 12-month inflation."

Follow our Fed live blog for more.

—John Melloy

Fed cuts rates as expected, but signals less reductions next year

The Federal Reserve trimmed its overnight borrowing rate by 25 basis points on Wednesday, in a widely anticipated move.

This brings the Fed's borrowing rate to a target range of 4.25% to 4.5%. However, the central bank indicated it would likely only cut rates twice in 2025, according to its closely watched "dot plot," down from four cuts given in its last forecast.

— Brian Evans

See the stocks making moves

These are some of the stocks moving in midday trading on Wednesday:

• Nvidia – Nvidia shares popped more than 4%, reversing earlier week-to-date losses that pushed the stock briefly into correction territory.
• General Mills — The consumer products maker slid 2.6% after telling investors to expect a weaker outlook than previously expected.
• Jabil — The electronics components stock surged 9.5% after earnings and guidance surpassed Wall Street expectations.

Click here for the full list.

— Alex Harring

Goldman says buy shares of MSCI

MSCI could have more upside potential heading into 2025, according to Goldman Sachs.

Shares traded marginally higher on Wednesday on the heels of analyst George Tong upgrading the stock to buy from neutral. His updated price target now reflects more than 18% upside potential, as of Tuesday's close.

"We believe conditions on the buy-side, which generates approximately 80% of total revenue at MSCI, are improving following 4-6 quarters of underperformance marked by fund closures, restructurings and consolidations caused by macro uncertainty, market volatility and elevated AUM outflows from active managers," the analyst wrote in a recent note to clients.

Moving into next year, Tong added that he expects momentum to continue due to a broadening of returns beyond the large-cap tech sector under the administration of President-elect Donald Trump. He also anticipates that organic revenue growth related to environmental, social and governance will see a reacceleration.

"We expect ESG organic revenue growth to reaccelerate in 2025, as well, driven by increased ESG visibility in the US post-election allowing fund managers to lean into strategies that will still see tailwinds in a Trump policy environment, and by regulatory tailwinds from SFDR in the EU that has already prompted sizable ESG equity inflows," he continued.

MSCI shares have had a positive run this year, posting year-to-date gains of more than 9%. The stock has also gained nearly 12% in the past three months.

— Sean Conlon

Nvidia exits correction territory

Nvidia's rally on Wednesday pulled the megacap technology stock out of a correction.

Shares of the artificial intelligence darling surged more than 4% in morning trading. If that holds, it would mark the stock's biggest one-day gain in around one month.

Wednesday's advance also propelled the stock outside of correction territory. That generally refers to a share price range that's at least 10% off of the stock's all-time closing high.

Nvidia was the best performer in the Dow and fourth-biggest gainer in the S&P 500 as of late Wednesday morning.

— Alex Harring, Adrian van Hauwermeiren

Housing starts, permits show a mixed bag in November

Building permits rose in November even as both housing starts and completions declined, the Census Bureau reported Wednesday.

Privately owned units authorized for construction totaled a seasonally adjusted annual rate of 1.505 million, up 6.1% from October and better than the Dow Jones consensus estimate for 1.43 million.

On starts, though, the total of 1.289 was off 1.8% from the month before and below the forecast for 1.34 million. Completions totaled 1.6 million, down 1.9%. However, single-family completions came to 1.038 million, better by 3,3% from October.

—Jeff Cox

Dow inches higher

The Dow Jones Industrial Average inched higher shortly after the opening bell on Wednesday, as Wall Street awaits the final Federal Reserve decision of 2024.

The 30-stock Dow gained 83 points, or 0.1%. The Nasdaq Composite ticked down 0.1%, while the S&P 500 pulled back 0.08%.

— Brian Evans

Nissan shares pop on reports of potential merger with Honda Motor

Nissan shares moved higher while Honda Motor stock slipped in the premarket, following media reports that the two Japanese automakers are considering a potential merger. Nissan shares gained 23.7% in the previous session, notching the firm's best day since at least 1985.

A report in the Nikkei newspaper said Honda and Nissan are considering operating under a holding company and will soon sign a memorandum of understanding. 

Vivek Vaidya, global client leader for mobility at research firm Frost & Sullivan, told CNBC the merger was triggered by Nissan's financial underperformance. Nissan in November had posted disappointing second-quarter results and cut its full year revenue and operating outlook. 

For more on the merger talks, read here.

— Pia Singh

General Mills, Nvidia among Wednesday's biggest premarket movers

These are the stocks making the biggest moves before the bell:

• General Mills — The maker of consumer food products such as Cheerios and Cocoa Puffs sank 4% after trimming its outlook for 2025.
• Jabil — The electronics components stock surged nearly 10% on stronger-than-expected fiscal first quarter earnings and guidance. The company lifted its full-year revenue and EPS guidance.
• Nvidia — Shares rose nearly 3% after four straight losing sessions. The chipmaker entered correction territory after falling 10% from its all-time high earlier in the week.

Read the full list of stocks here.

— Samantha Subin

Mortgage demand drops for the first time in 5 weeks

Mortgage rates moved markedly higher last week, causing overall mortgage demand to drop.

Total application volume fell 0.7% compared with the previous week, according to the Mortgage Bankers Association's seasonally adjusted index. That was the first decline in five weeks.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($766,550 or less) increased to 6.75% from 6.67%, with points remaining unchanged at 0.66 (including the origination fee) for loans with a 20% down payment. That rate was just 8 basis points higher the same week one year ago.

The driver of the drop was refinance demand. It fell 3% for the week but was still 41% higher than the same week one year ago. While mortgage rates aren't that much lower now than they were a year ago, it may be that refinance volume is so low in general that any slight move makes for a large comparison.

— Diana Olick

Market performance on Fed days has been weakest under Chair Powell, Bespoke Investment Group says

Market performance on Fed days has been weakest during Powell's tenure as chair, as compared to the three other Fed chairs coming before him, according to a tweet from Bespoke Investment Group. The tweet added that this statistic was especially true in the last trading hour of the day.

On average, the S&P 500 rose just 0.11% under Powell. Under Yellen, the S&P 500 averaged a 0.16% rise, while this rose to 0.26% under Greenspan's tenure. Market performance on Fed days was at its highest under Bernanke's tenure, averaging a 0.50% advance.

— Lisa Kailai Han

Ten out of 11 sectors ended Tuesday's session negative

Ten of the 11 GICS sectors ended Tuesday in the red, led to the downside by industrials, which slipped 0.9%.

On the other hand, the consumer discretionary sector was the only one to end the day higher and gained 0.28%.

All sectors are still positive for the year, led by communication services, up 44.08%. Health care, which has added just 1.73%, is the laggard.

— Lisa Kailai Han, Christopher Hayes

Stocks futures are little changed

Stock futures traded near flat Tuesday night.

Futures tied to the Dow Jones, S&P 500 and Nasdaq 100 were all marginally below the flatline shortly after 6 p.m. ET.

— Lisa Kailai Han