US stocks plunged on Wednesday, as Federal Reserve Chairman Ben Bernanke hinted a possible tapering of its quantitative easing later this year after a two- day policy meeting, though the central bank decided to sustain its pace of bond purchases.

The Dow Jones Industrial Average plummeted 206.04 points, or 1. 35 percent, to 15,112.19 points. The S&P 500 sank 22.88 points, or 1.39 percent, to 1,628.93 points. The Nasdaq Composite Index tumbled 38.98 points, or 1.12 percent, to 3,443.20 points.

The Fed kept its federal funds rate unchanged, according to a statement released Wednesday afternoon after the meeting of the Federal Open Market Committee (FOMC), the Fed policy setting arm. Meanwhile, the committee decided to continue purchasing additional agency mortgage-backed securities at a pace of 40 billion US dollars per month and longer-term Treasury securities at a pace of 45 billion dollars per month.

However, Bernanke struck a hawkish chord in his news conference following the policy announcement, hitting the stock market in the final trading hour. The governor said that bond buying could be reduced later this year, depending on conditions.

He added that if economic forecasts are correct, asset purchases will end by mid-2014. The Fed modestly raised its expectations for US GDP growth for 2014 after the FOMC meeting.

"The statement was neutral, after all, Bernanke's prepared text was market positive and the Q&A was pretty innocuous. And yet,10- year yields are closing on 2.35 percent and the Dow is down 180 points," FTN Financial Chief Economist Christopher Low commented in a note on Wednesday.

Low said: "I find myself combing Bernanke's remarks for reasons to sell. I suspect the press will do the same, and there will be a lot of chatter about a faster end to QE and faster tightening and so on."

With no major US data due out on Wednesday, all eyes were on the Fed announcement and Bernanke's remarks in his press conference.

The CBOE Volatility Index, widely considered as a fear gauge of the market, advanced 0.18 percent to end at 16.64.

All key sectors in the S&P 500 finished in red territory, led by telecoms and utilities.

In corporate news, Dell shares dipped 0.52 percent to 13.41 dollars a share after billionaire investor and Dell shareholder Carl Icahn called on the company to launch a tender offer for approximately 15.4 billion dollars to take the company private, his latest attempt to thwart the buyout proposal by Dell's founder and Chief Executive Michael Dell and Silver Lake Partners.

On Tuesday, the three major stock indices closed at their highest levels in June due to encouraging economic data.

In other markets, US oil price fell slightly Wednesday as a report showed the country's crude inventories rose last week. Light, sweet crude for July delivery lost 20 cents, to settle at 98.24 dollars a barrel on the New York Mercantile Exchange. While Brent for August delivery climbed 10 cents, to close at 106.12 dollars a barrel.

Gold future for August delivery on the COMEX division of the New York Mercantile Exchange gained 7.1 dollars to settle at 1,374 dollars per ounce on Wednesday.

The US dollar strengthened against major currencies Wednesday as Bernanke said the central bank could reduce its bond-buying later this year if economy continues to improve. In late New York trading, the euro dropped to 1.3274 dollars from 1.3405 dollars of the previous session and the British pound decreased to 1.5486 dollars from 1.5651 dollars.