Stocks have been under pressure since late August after comments and aggressive actions by the US Federal Reserve signaled the central bank's top priority is to stamp out high inflation even at the risk of putting the economy into a recession.
Minutes after the rate hike that was widely predicted by the market, stocks had initially pared gains as investors worried about the prospect of tighter monetary policy tipping the economy into a recession.
The Fed raised its target interest rate by three-quarters of a percentage point, the most by the US central bank since 1994, as it seeks to tame red-hot inflation.
The US central bank on Wednesday approved its biggest interest rate hike since 1994, lifting the target federal funds rate by 75 basis points to a range of between 1.5% and 1.75%.