05:27 PM EDT, 07/29/2026 (MT Newswires) -- (Updates with index/price moves and Federal Reserve/geopolitical news from the first paragraph.)

US equity indexes sank as the Federal Reserve reiterated its unflinching focus on inflation after three dissenters accompanied the fifth consecutive policy hold and as President Donald Trump promised to hit Iran hard following Tehran's attack on regional neighbors.

The Dow Jones Industrial Average plunged 2.2% to 51,594.14, with the Nasdaq Composite down 1.7% to 24,442.94 and the S&P 500 lower by 1.5% to 7,316.15 on Wednesday.

All sectors declined, except energy, consumer staples, and communication services. Industrials, technology, and financials led the steepest decliners.

The CBOE's volatility index VIX, also known as the fear gauge, surged 14% to 20.66.

The Fed held its policy rate steady in a divided decision, as three officials called for policy tightening. The Federal Open Market Committee maintained the target range for the federal funds rate at 3.50% to 3.75%. The committee reiterated its pledge to "deliver price stability" as inflation remained above the 2% target amid supply shocks.

"Let me reiterate. There is no soft inflation target. There is no soft implicit target. Not on this committee's watch. There's only a target and it's 2%," Fed Chair Kevin Warsh said.

Following the FOMC statement, the Fed Funds futures market shifted "slightly," Raymond James said in a note. For the December meeting, the probability of an unchanged Fed Funds rate decreased to 8.4% on Wednesday from 11.0% on Tuesday; the probability of a 25-basis-point increase in rates climbed to almost 92% from over 89%, and the likelihood of two 25-basis-point moves was little changed at 53.0%.

A drone hit a US-owned gas storage tanker at Egypt's Mediterranean port of Damietta, British maritime security firm Ambrey said in an initial assessment on Wednesday, Reuters reported.

President Donald Trump vowed to retaliate against Iran for firing on US troops days after he halted air strikes, the news report said. "So it's our turn," Trump was cited as saying at the White House. He said Washington would see if there was an agreement with Iran at some point, "but we're going to hit them very hard."

Yemen's Houthi group is considering imposing fees on commercial ships sailing through the southern Red Sea, a week after declaring a naval blockade on Saudi Arabia, regional sources with knowledge of the matter told Reuters. The Red Sea chokepoint is a critical export route for Saudi crude as maritime traffic remains disrupted at the Strait of Hormuz, a waterway through which about a fifth of global oil and gas flows.

The front-month US West Texas Intermediate jumped 6.8% to $84.66 a barrel and global benchmark North Sea Brent surged 7.8% to $90.66 a barrel after the US Central Command said it joined Saudi Arabian Armed Forces to conduct strikes in Iraq against Iran-aligned terrorists that the Islamic Revolutionary Guard Corps directed to attack US forces and Saudi energy infrastructure.

US Treasury yields were mixed, with the 10-year surging 7.7 basis points to 4.68% while the two-year was little changed at 4.27%.

In precious metal markets, gold futures climbed 0.7% to $4,066.1, and silver futures rose 0.6% to $57.84.