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Stocks dropped on Wednesday, with the Dow losing over 100 points, after Federal Reserve chief Janet Yellen suggested interest rate hikes about six months after the Fed's stimulus policy ends and sooner than markets expect.
The Dow Jones Industrial Average closed unofficially 114 points lower, while the S&P 500 lost 11 points and the Nasdaq fell 25.
In its policy statement, the Fed said the benchmark federal-funds rate will remain near zero for a "considerable time" after its asset-purchase program ends. Yellen attempted to clarify the term, saying its is "hard to define" but "probably means something on the order of around six months."
The central bank decided to cut its monthly asset bond purchase program by another $10 billion to $55 billion per month. This policy has buoyed markets in recent months.
The Fed also dropped the unemployment rate as its definitive yardstick for measuring the strength of the economy and emphasized it would rely on other factors in deciding when to boost interest rates.
Reiterating the Federal Open Market Committee's statement, Yellen said policy makers agree inflation will rise "gradually" toward the central bank's 2 percent target, despite recent readings well short of that objective.
Yellen also noted that the labor market has improved faster than had anticipated, though the economy still needs monetary support.