NEW YORK (CNN/Money) - Stocks and Treasury bond prices slumped Tuesday after the Fed raised short-term interest rates by a quarter-percentage point, as expected, but signaled that its rate-hiking campaign was unlikely to stop any time soon.

For more on the Fed announcement, click here.

The Dow Jones industrial average (down 94.88 to 10,470.51, Charts) fell 0.9 percent and the broader Standard & Poor's 500 (down 12.07 to 1,171.71, Charts) index fell 1 percent, both closing at more than seven-week lows.

The Nasdaq composite (down 18.17 to 1,989.34, Charts) lost 0.9 percent, closing at a new 2005 low.

"With equity markets closing at their lows of the day Tuesday, the likelihood is that trading may get off to weak start on Wednesday morning," Michael Sheldon, chief market strategist at Spencer Clarke wrote in a late-afternoon note on Tuesday.

Treasury prices tumbled Tuesday after the Fed announcement. The slide in prices raised the yield on the 10-year note to 4.62 percent -- the highest in eight months -- from 4.52 percent late Monday. Bond prices and yields move in opposite directions.

In currency trading, the dollar also reversed course following the announcement, turning higher after sliding modestly in the morning.

Oil prices tanked. U.S. light crude for May delivery fell $1.43 to settle at $56.03 a barrel on the New York Mercantile Exchange.

After the close, Oracle (Research) reported quarterly earnings of 10 cents a year, down from 12 cents a year ago, due to charges associated with its recent purchase of PeopleSoft. Stripping out the charges, earnings were 16 cents per share, a penny more than expected. Shares slipped modestly in after-hours trade.

Wednesday brings reports on consumer prices in February and existing home sales.

The Consumer Price Index is expected to have gained 0.3 percent after rising 0.1 percent in January. The "core" CPI, which excludes food and energy, is forecast to have increased 0.2 percent in February, analysts estimate. The core rose 0.2 percent in January.

Tuesday morning's Producer Price index was mostly in-line with estimates.

In terms of the CPI, "we'll be looking to see what the impact is from fuel and energy prices," said Michael Carty, principal at New Millennium Advisors. "If that seems to be transferring to the consumer, then that's going to be a factor for stocks."

Wednesday also brings the February read on existing home sales. Sales are expected to have fallen to a 6.7 million unit rate from a 6.8 million unit rate in January.

It was widely assumed the central bank would boost its target for the fed funds rate, an overnight bank lending rate, another quarter percentage point to 2.75 percent -- its seventh consecutive rate hike.

What was more up in the air was what policy-makers would say about the pace of future rate hikes -- in particular, whether they kept the language about raising rates at a "measured" pace.

The Fed kept "measured," a word that has appeared in the statement since right before the central bank began its rate hiking campaign last summer.

But the statement did say that "though longer-term inflation expectations remain well contained, pressures on inflation have picked up in recent months and pricing power is more evident." (To read the full statement, click here.)

"Everyone was so focused on the word 'measured' that they didn't expect them to update the rest of the language to be more aggressive, so that took people by surprise a little bit," said Joshua Shapiro, chief U.S. economist at Maria Fiorina Ramirez Inc.

Stock investors, and in particular, bond investors, took the change to mean the pace of rate hikes would need to speed up sometime soon. Stocks have been jittery over the last month amid worries that faster rate hikes would slow the economic recovery, hurt corporate profits and ultimately, stock prices.

"I think they are trying to say that they can still do their tightening 25 basis points at a time, but they still have a long way to go in raising rates," Shapiro added. "Essentially, the message is, 'if you think we're nearly done, think again'."

There are 100 basis points in one percent.

Declines were broad-based, with 26 out of 30 Dow issues falling.

Dow financials J.P. Morgan (down $0.73 to $35.06, Research), Citigroup (down $1.32 to $44.44, Research) and American Express (down $1.11 to $51.18, Research) were among the biggest losers.

Dow component American International Group (down $1.70 to $56.20, Research) lost almost 3 percent, after having traded lower all morning.

AIG, under pressure about a regulatory probe into whether the insurer manipulated its accounts, has now fired two executives who hinted that they would plead the Fifth Amendment if asked about their role in the scandal, the Wall Street Journal reported.

Other Dow losers included Intel (down $0.48 to $23.02, Research), which slumped along with the semiconductor sector, and Exxon Mobil (down $1.25 to $60.90, Research), which fell along with the broader oil sector.

Some blue chips that weighed on the Dow Monday bounced Tuesday, protecting the Dow from bigger losses. Among them were DuPont (up $0.36 to $51.74, Research) and Altria (up $0.27 to $63.55, Research), both up modestly.

Among other movers, home builders were off their highs, but still positive after KB Home (up $1.90 to $118.60, Research) and Lennar (up $0.73 to $55.60, Research) reported higher-than-expected quarterly earnings and boosted fiscal-year 2005 forecasts.

The Dow Jones Home Construction (up $3.57 to $841.91, Research) index added 0.4 percent, having been up more than 3 percent earlier.

Among other movers, Electronic Arts (down $11.20 to $55.15, Research) fell nearly 17 percent in active Nasdaq trade after warning that 2005 earnings would miss expectations. The video game publisher cited weak sales in North America and Europe.

Market breadth was negative. On the New York Stock Exchange, decliners beat advancers twelve to five on volume of 1.67 billion shares. On the Nasdaq, winners topped losers three to two as 1.84 billion shares changed hands.

The February Producer Price Index (PPI) was released before the open. PPI rose 0.4 percent in February, after increasing 0.3 percent in January. Economists surveyed by Briefing.com expected it to be up 0.3 percent.

The so-called "core" PPI, which excludes often volatile food and energy prices, gained 0.1 percent, in line with estimates, after climbing 0.8 percent in January.

COMEX gold rose 20 cents to settle at $431.60 an ounce.

In global trade, Asian stocks ended lower and European markets ended mixed.