NEW YORK (CNNMoney.com) - Stocks slumped Tuesday after the Federal Reserve boosted a key short-term interest rate by a quarter-percentage point, as expected, and indicated its rate-hiking campaign was not over yet.

The Dow Jones industrial average (down 95.57 to 11,154.54, Charts) lost 0.8 percent. The broader Standard & Poor's 500 (down 8.38 to 1,293.23, Charts) index lost 0.6 percent. The tech-heavy Nasdaq composite (down 11.12 to 2,304.46, Charts) lost 0.5 percent.

The three major gauges had posted modest gains ahead of the 2:15 p.m. ET announcement, but stumbled soon after.

Treasury prices slumped, raising the corresponding yields. Oil prices jumped nearly 3 percent.

"I would take the reaction in the stock and bond markets to mean an expectation of the Fed raising rates for longer than had been expected," said Ron Kiddoo, chief investment officer at Cozad Asset Management.

Kiddoo said the bond market reaction today was more notable than that of the stock market. He said that stock investors may not have reacted as strongly as they did had there not also been a 3 percent rally in oil prices today. In addition, stocks have generally been on an uptrend over the last few weeks, making them vulnerable to a pullback.

Treasury prices tumbled, adding to earlier declines. The decline raised the yield on the benchmark 10-year note to 4.78 percent from 4.70 percent late Monday. Treasury prices and yields move in opposite directions.

U.S. light crude oil for May delivery rallied $1.91 to settle at $66.07 a barrel on the New York Mercantile Exchange, rising on supply concerns.

Investors will be attuned to the weekly oil inventories report Wednesday. No corporate or economic news is due.

General Motors (Research) stock could be active Wednesday. After the close Tuesday, the automaker said it would restate almost four years of results for its GMAC finance unit. (Full story).

As of 6:00 p.m. ET, Nasdaq and S&P futures pointed to a flat open for stocks, when fair value is taken into account.

The Federal Reserve opted to boost the Fed funds rate, an overnight bank lending rate, by a quarter-percentage point to 4.75 percent, as had been expected by market participants. The increase was the 15th in a row since the central bank began its rate-hiking campaign in June of 2004.

In the closely-watched statement, the bankers went into greater detail than in recent statements about the health of the economy in the first quarter after a rough fourth quarter, and about the impact of higher energy prices and other inflationary factors.

However, the part of the statement that hints at future policy was unchanged from January, again stating that some further firming "may be needed." This may have disappointed stock investors who were hoping that the central bank would indicate the end to rate hikes was near.

"I think the market took [the statement] as marginally more hawkish because they didn't signal they are done with rate hikes, and also because they played down the slowing of economic growth last quarter," said Michael Darda, chief economist at MKM Partners.

"They are saying that they are not convinced that the threat of higher energy prices is over, that they continue to worry about pricing pressure, and with a strong economy, they can keep raising rates," Darda added.

This meeting was the first helmed by new Fed chair Ben Bernanke, who took over for Alan Greenspan following his retirement at the end of January.

"What's disappointing is that after a two-day meeting with a new Chairman, we got a statement that is little changed from the last one," said Jeff Kleintop, chief investment strategist at PNC Advisors.

He said that this could reflect an underlying dissension among the current Fed policy makers, despite the fact that the rate hike was voted for unanimously. Some dissension would not be surprising, he noted, as the current group includes several new governors, as well as a new chief.

Kleintop said it was also interesting that the statement did not discuss the housing market or the yield curve, two issues that have preoccupied stock investors of late, and that Bernanke has discussed recently.

While the Fed was a negative for investor sentiment, it was positive for oil stocks. The Philadelphia Oil Service (Charts) sector index added 2 percent.

In addition, eBay (up $1.72 to $38.87, Research) jumped 4.6 percent, ahead of a key patent case that will go before the Supreme Court Wednesday.

Other Internet shares gained too, lifting the Goldman Sachs Internet (Charts) index by around 0.3 percent.

Home builder Lennar (up $0.71 to $61.03, Research) reported higher fiscal first-quarter earnings that beat estimates and said new orders rose modestly, when rivals have recently reported falling orders. Shares rose modestly.

Blue chips were hit particularly hard, with 29 out of 30 Dow stocks ending lower and one -- Home Depot (unchanged at $42.99, Research) -- ending unchanged.

The biggest losers were tech and financial components.

Hewlett Packard (down $1.04 to $32.07, Research) lost more than 3 percent. Financial issues AIG (down $1.12 to $66.03, Research), American Express (down $0.79 to $52.57, Research) and JP Morgan (down $0.55 to $41.56, Research) all declined at least 1 percent..

General Motors said it is laying off several hundred employees as part of its plan to bring its ailing North American operations back to profitability. The automaker is expected to announce more job cuts later in the year. GM (down $0.18 to $22.75, Research) shares lost 0.8 percent.

Market breadth was negative. On the New York Stock Exchange, losers beat winners seven to four on volume of 1.56 billion shares. On the Nasdaq, decliners topped advancers by three to two on volume of 2.04 billion shares.

Investors also eyed a stronger-than-expected reading on March consumer confidence from the Conference Board. Consumer confidence rose to 107.2 from an upwardly revised 102.7 in February. Economists surveyed by Briefing.com thought it would hit 102.

COMEX gold for April delivery fell 40 cents to $567 an ounce.

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