Financial markets shuddered Wednesday after the Federal Reserve said it could start scaling back its huge economic stimulus program later this year and end it by the middle of 2014.
The reaction by investors -- the Dow Jones industrial average fell more than 200 points and the yield on the 10-year Treasury note rose to its highest in 15 months -- showed just how much investors have come to depend on the Fed's easy money policies that have helped send the stock market up 141 percent in the past four years.
"Any whiff there's going to be reduction in the [Fed's] ammunition is met with selling," said James Camp, managing director of fixed income at Eagle Asset Management.
The sell-off was broad. All 10 sectors in the Standard's & Poor's 500 were down.
A brighter outlook for the U.S. economy normally would convince people to buy stocks, not sell them. But Talley Leger, a strategist at Macro Vision Research, said investors have become hooked on Fed stimulus and so they sold.
The Dow fell 206.04 points, closing at 15,112.19. The S&P 500 index fell 1.39 percent to 1,628.93. The Nasdaq composite fell 1.12 percent to 3,443.20.
The yield on the 10-year Treasury note jumped to 2.35 percent. The yield on the note started the day at 2.19 percent. -- AP