According to final results, the Dow Jones index fell 0.80% to 34,641.18 points.
The technology-dominated Nasdaq dropped more than it had won the day before (-2.26%) to 14,204.17 points.
The S&P 500 lost 1.26% to 4,525.12 points.
Lael Brainard, a Fed governor who usually favors very accommodative monetary policy, said the US central bank should be "ready to act more strongly" against inflation.
The official also pleaded for a reduction in the balance sheet of the Fed at its next monetary meeting in May, a measure which also amounts to tightening credit to curb inflation.
“The market knew until now that the members of the Fed intended to raise rates by 50 basis points instead, perhaps even at each meeting. But what the market did not know was that 'they thought they would start reducing the Fed's balance sheet at the next meeting!', explained Gregori Volokhine of Meeschaert Financial Services.
"It was not planned. This is the first time we have a date," noted the analyst.
Trading that started modestly in the red on Tuesday deepened its losses after hawkish statements on rates from the Fed governor, who is also still waiting for the Senate to confirm her appointment as vice president of the central bank.
After his remarks, bond yields accelerated their run up, with yields on 10-year Treasuries climbing to a three-year high of 2.54%, while the dollar also strengthened against the majors. currencies.
"We can no longer say that we are not witnessing a severe monetary tightening, even if it is justified in relation to inflation", further indicated Mr. Volokhine.
“The market continues to react lower to what it doesn't know. What it didn't know was even tougher talk from the Fed,” the analyst concluded.
Other factors dampened trading, such as the Reserve Bank of Australia's (RBA) signal that it might be tougher than expected, no longer calling itself "patient" about policy tightening.
The extended Covid-19 lockdowns in Shanghai, China have also reignited fears of new problems in the supply chain, still not recovering from the global impact of the health crisis, also noted Brad Bechtel, director for the market. exchange at Jefferies.
"All central bankers talk about problems in the supply chain, because it weighs on inflation" and on the outlook for monetary policy, judged this analyst.
The Nasdaq suffered while the index had posted a good start to the week in the footsteps of Twitter and the coup of Elon Musk, who took a major stake in the social network.
Twitter still gained 2.02% to 50.98 dollars, after more than 27% the day before.
As of Tuesday, the direction of the social network indicated in a tweet that Elon Musk, leader of Tesla and SpaceX, joined the board of directors of Twitter.
In a surprise initiative, the wealthy entrepreneur acquired 9.2% of the capital of the social network for nearly 2.9 billion dollars, instantly becoming its largest shareholder.
Other big names in tech have suffered, such as Netflix (-2.90%), Google (Alphabet -1.80%) or Apple (-1.89%).
The title Amazon dropped 2.55% to 3,281.10 dollars, despite the announcement on Tuesday of unprecedented contracts with three space launch companies, including the European Arianespace, for 83 launches into orbit.
The cruise line Carnival was celebrated (+ 2.43% to 20.22 dollars), after indicating that last week it had recorded the best week of reservations in its history.
An agreement between General Motors (GM) and its Japanese counterpart Honda to co-develop a new line of electric vehicles at "affordable" prices did not help the title of the American automaker (-4.08% to 41.42 dollars) .
The title of Boeing lost 4.47% to 182.64 dollars.
A Wall Street Journal article reported a new production incident during the development of one of the Air Force One planes reserved for the American president.
When asked, Boeing did not provide a reaction.
On the geopolitical front, the United States has stepped up pressure on Moscow by prohibiting Russia from repaying its debt with dollars held in American banks.
© 2022 AFP