U.S. stocks tumbled in volatile trading Wednesday afternoon as the Federal Reserve dealt another outsized interest rate hike in its fight against stubborn inflation.

The U.S. central bank lifted its benchmark policy rate by 0.75% for a third consecutive time, bringing the federal funds rate to a new range of 3.0% to 3.25% — its highest level since 2008 — from a current range between 2.25% and 2.5%.

The S&P 500 and Dow Jones Industrial Average each shed around 1.7%, while the technology-heavy Nasdaq Composite was off by 1.8%. Meanwhile, the CBOE Volatility Index (^VIX) – Wall Street’s "fear" gauge – briefly spiked above 30 for the first time since July 1.

"Restoring price stability is essential to set the stage for achieving maximum employment and stable prices over the longer run," Fed Chair Powell said in his speech after the meeting. "We will keep at it until we are confident the job is done."

Activity across the bond market was in focus in the aftermath of the policy announcements. Treasury yields continued their perilous climb Wednesday, with the rate-sensitive 2-year Treasury note surpassing 4.1% — the highest level since 2007. The benchmark U.S. 10-year note held above 3.5%, its highest level since 2011.

"You can only steer the ship towards the storm for so long, but eventually there comes a time when you need to batten down the hatches and with the Fed’s third consecutive 75 basis point rate hike over the past four months, market participants should be looking for cover to weather the upcoming storm," Charlie Ripley, senior investment strategist at Allianz Investment Management said in a note. "Overall, today’s policy action is largely reflective of the economic backdrop and in order to slow the economy, the Fed clearly has to be aggressive."

Among market movers Wednesday was General Mills (GIS), which rose nearly 6% after the company reported better-than-expected quarterly earnings and raised its full-year sales outlook as it benefits from higher prices on breakfast cereals, snack bars, and pet food.