The S&P 500 fell 3.6%, closing at 4,146, with more than 95% of companies listed on the benchmark index in the red.
Technology companies had some of the biggest losses and weighed down the broader market, in a reversal from the solid gains they made a day earlier.
Markets steadied this week ahead of the policy update, but Wall Street was concerned the Fed might elect to raise rates by three-quarters of a percentage point in the months ahead.
When Powell said the Fed wasn’t considering a mammoth increase in short-term rates, that sent a signal to investors to send stock prices soaring and bond yields tumbling.
But diminishing the odds of a 0.75% hike doesn’t mean the Fed is done raising rates steadily and sharply as it fights to tame inflation.