How did market indices respond after the December FOMC meeting in 2024?

The market indices fell sharply after the December FOMC meeting in 2024 due to the Committee's decision to implement a more aggressive tightening of monetary policy than investors had anticipated. This includes potential increases in interest rates and adjustments to asset purchase programs, which can create concerns about slower economic growth and the cost of borrowing. The market typically reacts negatively to such news as it can signal reduced liquidity in the economy and tightened financial conditions.

A significant tightening can lead to fears of decreased consumer spending and business investment, as higher interest rates make loans more expensive. These concerns contribute to an overall bearish sentiment in the market, leading to sharp declines in equity indices as investors adjust their expectations for future earnings and economic conditions.

In contrast, if the other options were considered, such as steady rises or no significant change, these would generally follow a more dovish or reassuring tone in the FOMC's statements, which was not the case here. The anticipation of aggressive monetary policy and its implications often leads to greater volatility and downward pressure, which aligns with the observed market reactions following such meetings.