Shares of Indian IT companies like Infosys, TCS, Wipro and others tumbled up to 3% on Thursday after a hawkish tone from the US Federal Reserve raised expectations of a rate hike later this year, triggering worries about reduced discretionary spending.The sharp fall in IT stocks pushed the Nifty IT index down nearly 2% to 28,263 on Thursday, emerging as the top sectoral loser on a muted market day. The index has now snapped a three-session gaining streak.The US Federal Reserve held interest rates unchanged on Wednesday, but a higher number of policymakers expected a rate hike in borrowing costs later this year amid growing concerns about inflation lodged above the US central bank's 2% target. In what was the first Fed FOMC meet under Chairman Kevin Warsh’s tenure, the American central bank acknowledged that inflation was “elevated relative to the Committee’s 2% goal”, which was attributed in part to “supply shocks that have driven price increase in certain sectors, including energy.”Also read: US Federal Reserve keeps interest rates unchanged, projects one rate hike for 2026Breaking with past practices by Fed chiefs, Warsh did not submit an interest-rate-path projection as part of quarterly forecasts. He told reporters the central bank would deliver on price stability.How Fed’s rate hikes impact IT stocks?After the meeting, trader bets that rates would hold steady by year-end had fallen to 15.7% from 40% on Tuesday, according to CME Group's ⁠FedWatch tool. Expectations for a 25 bps rate hike by December stood at nearly 38% while the probability for a 50 bps hike was nearly 33%.IT stocks derive a major portion of their revenue from the North American market. Rate hikes in US or inflation spikes in the country may impact discretionary spending in the country, which in turn can affect these companies.Also read: Nasdaq, S&P fall over 1% as Fed holds rates; traders raise hike betsIT stocksNotably, IT stocks have seen sharp volatility this year so far. In the beginning of the year, new AI innovations spooked investors about the possibility of disruption in India’s much touted IT sector. The raging war in the Middle East further dampened sentiment on the overall market, with IT stocks being no exception, despite brief support from the falling rupee.Infosys shares dropped around 3% to trade at Rs 1,125 apiece, while those of Tech Mahindra and TCS fell nearly 2%. Persistent Systems, Wipro, OFSS, and HCL Technologies shares were down around 1% each, while LTI Mindtree and Mphasis were trading with marginal losses.Also read: Dividend alert! Last day to buy HDFC Bank, Tata Motors PV, 14 other stocks for dividends worth Rs 248 (Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)