Stocks fell on Wednesday as the Federal Reserve raised interest rates again, while also acknowledging that the crisis in the banking sector could slow the economy. The Dow Jones Industrial Average fell over 500 points, while the S&P 500 Index and Nasdaq Composite both slid about 1.6%.

Here's how the market settled on Wednesday:

S&P 500 Index (SPY  ): -1.65% or -65.90 points to 3,936.97

Dow Jones Industrial Average (DIA  ): -1.63% or -530.49 points to 32,030.11

Nasdaq Composite Index (QQQ  ): -1.60% or -190.15 points to 11,669.96

The Fed raised rates by 25 basis points, which was widely expected by Wall Street. The latest hike brings the federal funds rate to a new range of 4.75% and 5%, its highest level since October 2007.

In a statement, policymakers said the central bank "will closely monitor incoming information and assess the implications for monetary policy," adding that the committee "anticipates that some additional policy firming may be appropriate" in order to bring inflation to the Fed's desired level of 2%.

In afternoon remarks following the policy decision, Fed Chair Jerome Powell noted that "financial conditions seem to have tightened" following the collapse of Silicon Valley Bank and other banking sector turmoil, adding that current financial conditions could slow the economy.

"We'll be looking to see how serious this is and does it look like it's going to be sustained. And if it is, it could easily have a significant macroeconomic effect, and we would factor that into our policy decisions," he added.

Bank sentiment slid on Wednesday as recent remarks from U.S. Treasury Secretary Janet Yellen assured that the banking system is "sound" but the government is not considering a broad increase in deposit insurance. The S&P Regional Bank ETF (KRE  ) fell over 5% by market close.

Elsewhere, Nike (NKE  ) shares fell on Wednesday after the retailer beat Wall Street estimates for its holiday quarter on both earnings and revenue, but its inventory weighed on its margins. The company's sales in China also disappointed, but CEO John Donahoe said Nike feels confident about its momentum in the region.

"The fundamentals of this market are good, right? It is a very large market that's growing. Sport and wellness is a key trend and tailwind there. There's a desire for innovation and style. And the key to winning in this market is simply put: having great innovation and connecting with Chinese consumers in a locally relevant way," Donahoe said during an earnings call.

Looking ahead, market participants will continue to weigh the Fed's latest policy decisions and comments from Powell heading towards the end of the week.