NEW YORK (CNN/Money) - Stock and bond prices tumbled Wednesday after the Federal Reserve changed the language in its outlook for interest rates, sparking worry among investors about when the central bank might start raising rates.

The Dow Jones industrial average (down 141.55 to 10468.37, Charts), which had been higher early in the session, abruptly turned lower and ended down 1.3 percent.

The Standard & Poor's 500 (down 15.57 to 1128.48, Charts) index also fell about 1.3 percent while the Nasdaq composite (down 38.67 to 2077.37, Charts) lost 1.8 percent.

Treasury bond prices tumbled while the dollar strengthened.

The central bank held its target for a key short-term interest rate at 1.0 percent, the lowest in more than 40 years.

But the Fed's policy-making committee also changed the wording of its statement on monetary policy, dropping a promise to hold rates steady for a "considerable period," and saying instead that they would be "patient" in keeping rates low.

The change worried some investors who had viewed continued low rates and a fast-growing economy as the best of all worlds for the stock market.

The change in the Fed's wording "blind-sided the markets," Ian Shepherdson, chief U.S. Economist at High Frequency Economics, wrote in an afternoon note.

Many investors had been betting the central bank would start raising rates, but much later this year. Now that process could start sooner, some market analysts said.

But others said investors overreacted.

"The Fed is still maintaining its supportive stance," said Ned Riley, chief investment strategist at State Street Global Advisors. "They are not going to raise rates until the economy begins to generate more jobs."

In its statement, the Fed painted a mixed picture of the economy, saying output was "expanding briskly" but that new hiring was "subdued" and that inflation was "muted." (For more on the Fed and rates, click here.)

Still, even the prospect of higher rates was enough to unnerve Treasury investors, who are particularly sensitive to inflation and interest rates.

Treasury prices tumbled, with the 10-year note sinking 30/32 of a point in price, boosting its yield to 4.19 percent from 4.07 percent late Tuesday. Bond prices and yields move in opposite directions.

The dollar, meanwhile, made gains versus the yen and the euro. The promise of higher rates makes some U.S. assets more attractive to overseas investors, which would boost demand for dollars.

After the close, shares of both Veritas Software (VRTS: Research, Estimates) and JDS Uniphase (JDSU: Research, Estimates) fell. Veritas issued a quarterly profit after reporting a loss a year earlier, but issued a current quarter forecast that is lower than what analysts were looking for. JDSU reported a narrower loss than a year earlier and better revenue in the current quarter, but still saw its shares fall in after-hours trade, with investors seeming to take a "sell the news" attitude.

Reports are due Thursday before the bell from Dow components Boeing (BA: Research, Estimates), Exxon Mobil (XOM: Research, Estimates) and Honeywell (HON: Research, Estimates). Earnings are also expected from Bristol-Myers Squibb (BMY: Research, Estimates), Duke Energy (DUK: Research, Estimates), Eli Lilly (LLY: Research, Estimates), UPS (UPS: Research, Estimates) and Verizon Communications (VZ: Research, Estimates).

Weekly jobless claims are also due before the open Thursday and are forecast to show that 340,000 people filed new claims for unemployment last week, virtually unchanged from 341,000 the week before.

The Dow and Nasdaq closed at their highest levels in more than 2-1/2 years Monday, leaving stocks vulnerable to profit-taking. That's been exacerbated by corporate earnings reports, which have been strong but have still had trouble living up to Wall Street's expectations.

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"What we're looking at generally is whether the market can get past these levels," said Scotty George, chairman at du Pasquier Asset Management. "We think there's enough strong sentiment and stimulus in the pipeline for that to happen and that the earnings will ultimately lead the market, but it's a process, and it's going to take time."

The morning's movers were the companies that had recently released earnings, but selling swept Wall Street after the Fed's announcement. Of the 30 stocks in the Dow industrials, 27 closed lower.

Dow component Altria (MO: up $0.65 to $55.65, Research, Estimates) reported a profit of $1.02 a share at midday, shy of analysts' forecasts but up from a year earlier. Shares gained 1.2 percent.

DuPont (DD: up $1.09 to $43.67, Research, Estimates) also bounced 2.5 percent. The stock was knocked lower Tuesday, even after the chemical maker announced improved fourth-quarter earnings.

But many stocks fell sharply, including techs and others that are most interest-rate sensitive.

The Dow's biggest losers on a percentage basis were Alcoa (AA: down $1.48 to $33.78, Research, Estimates), down more than 4 percent, and Hewlett-Packard (HPQ: down $1.34 to $24.28, Research, Estimates), down more than 5 percent.

Among other movers, Tenet Healthcare (THC: down $2.97 to $13.18, Research, Estimates) fell 18.4 percent in active trading after announcing it will sell more than a fourth of its hospitals and take a $1.4 billion charge in the fourth-quarter.

Time Warner (TWX: down $0.85 to $17.96, Research, Estimates), CNN/Money's parent, shed 4.5 percent after it reported an operating income decline in the fourth quarter. Still, the company registered a net profit in the quarter, compared with the huge loss a year earlier.

Amazon.com (AMZN: down $3.78 to $51.96, Research, Estimates), which late Tuesday reported its first profitable year, saw its stock tumble 6.8 percent, as investors apparently were disappointed that the company's net met but didn't exceed forecasts.

Among the few gainers, telecom gear and software maker Avaya (AV: up $2.44 to $17.85, Research, Estimates) rallied 15.8 percent after reporting a quarterly profit that topped expectations and reversed a loss from a year earlier.

Electronic equipment contract manufacturer Flextronics (FLEX: up $1.37 to $18.44, Research, Estimates) jumped 8 percent after reporting a quarterly profit, reversing a year-earlier loss, on sales that topped forecasts.

Chipmaker Broadcom (BRCM: up $1.03 to $41.63, Research, Estimates) reported earnings that topped estimates, after a loss a year earlier. The company also said its revenue in the current quarter would rise 10 percent from the last quarter. The stock climbed more than 5 percent.

Stock market breadth was negative. Losers outnumbered gainers by nearly 3 to 1 on the New York Stock Exchange, where 1.81 billion shares traded. On the Nasdaq, decliners beat advancers by a similar margin on volume of nearly 2.3 billion shares.

NYMEX light sweet crude oil futures fell 50 cents to settle at $33.62 a barrel. COMEX gold rallied $4.60 to settle at $415.80 an ounce.