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The U.S. stock market experienced a severe selloff Wednesday after Federal Reserve Chair Jerome Powell ‘s comments triggered what CNBC’s Jim Cramer described as “incredible panic” in the markets.

What Happened : “People throwing away good and bad. Typical index fund behavior,” Cramer wrote on X, specifically highlighting concerns about small-cap stocks’ performance. “And all of those people who loved the Small Caps (the Russell 2000?) now what??”

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The market reaction came after Powell announced a 25-basis-point rate cut to 4.25%-4.5%, while signaling only two potential rate cuts in 2025 – fewer than the four projected in September .

The selloff was broad and deep, with the Dow Jones Industrial Average, as tracked by the SPDR Dow Jones Industrial Average ETF (NYSE: DIA ) plunging 2.48% to close at 42,326, marking its worst one-day drop since September 2022.

The S&P 500 index — tracked by the SPDR S&P 500 ETF Trust (NYSE: SPY ) fell 2.9% to 5,872, while the tech-heavy Nasdaq 100, tracked by Invesco QQQ Trust (NASDAQ: QQQ ), dropped 3.6% to 21,209.

Small-cap stocks, as measured by the iShares Russell 2000 ETF (NYSE: IWM ), bore the brunt of the selling pressure, tumbling 4.4% to 2,231, completely erasing their post-election gains.

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Why It Matters : The “Magnificent Seven” tech stocks collectively lost over $600 billion in market value , with Tesla Inc. (NASDAQ: TSLA ) leading the decline, down 8.2%.

Powell described the Fed’s approach as entering “a new phase” for monetary policy, emphasizing a more cautious stance on future rate cuts. The Fed now projects inflation to reach 2.5% in 2025, up from its previous estimate of 2.1% .