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U.S. stocks capped a turbulent session with heavy losses after Fed chief Janet Yellen hinted at rate hikes as soon as six months after the central bank ends its bond purchases.

Today's Markets

The Dow Jones Industrial Average dropped 114 points, or 0.7%, to 16222, the S&P 500 skidded 11.5 points, or 0.61%, to 1861 and the Nasdaq Composite slumped 25.7 points, or 0.59%, to 4308.

Federal Reserve chair Janet Yellen's first press conference at the central bank's helm was going smoothly ... until she said the central bank could begin hiking rates from record lows six months after it completes its bond-buying program. 

The move initially sent the Dow tumbling nearly 200 points. Meanwhile, traders ditched U.S. Treasury bonds, sending yields spiking. The yield on the benchmark 10-year U.S. Treasury bond recently jumped 0.123 percentage point to 2.793%.

"It is going to be very difficult for [the Fed] to tighten at this juncture and when push comes to shove, they won’t do anything," said Michael Block, chief strategist at Rhino Trading Partners. 

"With that in mind, hearing that Yellen may have a time in mind and is thinking 'six months' after tapering ends has folks thinking that maybe, just maybe, she is going to push this forward."

In its policy statement, the Fed changed its guidance for when it will hike interest rates from record lows following its two-day policy-setting meeting. The central bank will look at a ‘wide range’ of economic measures, instead of setting an explicit jobless rate target of 6.5%. The Fed also said it will trim its asset purchases by $10 billion a month to $55 billion a month starting in April. The Fed added a harsh winter slowed economic activity recently.

The FOMC also trimmed its jobless-rate forecast through 2016, pared down the high end of its gross domestic product view and kept its inflation expectations essentially unchanged.

In corporate news, FedEx (FDX) posted fiscal third-quarter results that widely missed expectations. The shipping giant blamed bad weather, but the shares still slumped on the news. 

Elsewhere, Gold tumbled $29.90, or 2.2%, to $1,329 a troy ounce. U.S. crude oil futures rose 64 cents, or 0.64%, to $100.34 a barrel. Wholesale New York Harbor gasoline dipped 0.97% to $2.875 a gallon. 

Follow Adam Samson on Twitter @adamsamson.