A higher-than-expected hike in the Federal Funds rate announced on Wednesday, following the Federal Open Market Committee (FOMC) meeting, took Wall Street for a wild ride last week.

Volatility was high across debt, equity and commodity markets.

Treasury bond yields, which climbed from 3.23% to 3.48% ahead of the FOMC meeting in anticipation of a moderate 50-basis-point hike, dropped to 3.38% after the hawkish 75-basis-point hike. And they settled at 3.22% by the end of the week.

The Treasury bond market seems to have liked the Fed’s hawkish move. It added credibility to the nation's central bank, which has been very slow to raise interest rates.

The Fed erroneously viewed inflation as a temporary problem due to supply chain bottlenecks. It prevented the supply side of the economy from catching up with the demand side as pandemic lockdowns ended.

The equity market moved opposite the Treasury market earlier in the week, with the S&P 500 dropping from 3,804 on Monday morning to 3,708 by Tuesday afternoon. But it rallied after the Fed's decision Wednesday before falling sharply on Thursday and closing the week at 3,674.

The equity market is beginning to factor in slower economic growth, which will take its toll on corporate earnings.

Commodity markets rallied early in the week in anticipation of a dovish Fed action. But they sold off at the end of the week as traders and investors realized that a hawkish Fed and a weak economy would cause a great deal of demand destruction for commodities. The July 22 crude oil contract climbed from $119 to $123 ahead of the Fed decision. But it dropped to $110 by the end of the week.

What's next for Wall Street?

Most market experts have told International Business Times they are pessimistic about the near future. They see further interest-rate hikes as the Fed tries to fight soaring inflation.

"May's CPI report convinced investors that the Fed remains well behind the inflation curve and are going to have to do more than what is currently priced in. It's catalyzed the market downdraft as the market tries to recalibrate tighter financial conditions and higher-than-expected interest rates," said Amanda Agati, chief investment officer at PNC Asset Management Group.

Charles Qi, the CEO of StockPick, is skeptical of the Fed's effectiveness in taming inflation without pushing the economy into a recession.

"The Federal Reserve's misstep in raising interest rates too late means it will be difficult to tame the current high inflation without causing a recession," he said. "Its signal of aggressive rate hikes this year bodes ill for both the economy and the stock market. As a result, investors should consider increasing cash holdings to protect against downside risks and tilting to value stocks which tend to outperform growth stocks in high inflation environments."

Harry Turner, the founder of The Sovereign Investor, sees a tough road ahead for the Fed and equities.

"Unless central banks convince markets that they can tame inflation and engineer a soft landing, equities will remain on the back foot. The problem is that the bar to achieve this is very high," he said. "[Federal Reserve Chairman Jerome] Powell reiterated that his job won't be done until inflation turns decisively lower. However, the supply-driven nature of inflation puts this out of his control to a large degree."

Anessa Custovic, the chief investment officer at Cardinal Retirement Planning, sees further volatility for Wall Street in the months ahead, with economic data setting the pace for Fed rate hikes.

"I think any big misses, i.e., CPI release or earnings — the market will punish and have much volatility,” Custovic said. "If releases like CPI or earnings meet or exceed expectations [in a good way], I don't think we will see the normal market rallies. The market will move a bit, but I think we're going to see a cautious market going forward, paying close attention to data and the Fed."