Investing.com - U.S. stocks fell on Wednesday after Federal Reserve Chair Janet Yellen said interest rate hikes were possible not long after the Fed wraps up its monthly bond-buying program.
At the close of U.S. trading, the Dow Jones Industrial Average fell 0.62%, the S&P 500 index fell 0.61%, while the Nasdaq Composite index fell 0.59%.
The Fed announced earlier it was leaving interest rates unchanged and reduced the amount of bonds it buys in the open market each month to $55 billion from $65 billion, both moves in line with expectations.
The Fed's asset-purchasing program, which kicked off in 2012 at $85 billion a month, has suppressed long-term interest rates for over a year, sending investors to assets like stocks with the hope investing and hiring ensues.
Elsewhere, the Fed omitted previous language calling for rate hikes if the unemployment rate approaches a 6.5% threshold, a policy tool known as forward guidance.
Even though the economy is improving, a highly accommodative monetary policy stance remains appropriate, the U.S. central bank said.
Stock dropped, however, after Fed Chair Janet Yellen suggested at a press conference that interest rates could rise six months after the bond-buying program ends, which sparked a selloff in equities markets and fueled demand for the dollar.
Yellen's words left many concluding that the Fed's bond-buying program could end this fall while rate hikes could follow in early 2015, which sent investors scrambling to the sidelines.
Leading Dow Jones Industrial Average performers included UnitedHealth, up 2.51%, Intel, up 0.79%, and JPMorgan, up 0.44%.
The Dow Jones Industrial Average's worst performers included Walt Disney, down 1.80%, Boeing, down 1.45%, and General Electric, down 1.42%.
European indices, meanwhile, finished mixed.
After the close of European trade, the EURO STOXX 50 rose 0.13%, France's CAC 40 fell 0.12%, while Germany's DAX 30 rose 0.37%. Meanwhile, in the U.K. the FTSE 100 fell 0.49%.
On Thursday, the U.S. is to publish its weekly report on initial jobless claims as well as data on existing home sales and manufacturing activity in the Philadelphia region.