The main US indexes see-sawed before slumping in the final 30 minutes of trading to close lower on Wednesday, as investors absorbed the Federal Reserve's latest rate hike and future policy commentary.

At the end of its two-day meeting, the Fed lifted its policy rate by 75 basis points for the third time to a 3.00-3.25 percent range. Most market participants had expected such an increase, with only a 21 percent chance of a 100 bps rate hike seen prior to the announcement.

However, policymakers also signaled more large increases to come in new projections showing its policy rate rising to 4.40 percent by the end of this year before topping out at 4.60 percent in 2023. This is up from projections in June of 3.4 percent and 3.8 percent respectively.

Rate cuts are not foreseen until 2024, the central bank added, dashing any outstanding investor hopes that the Fed foresaw getting inflation under control in the near term.

With the mix of the expected and the slightly-unexpected, respectively in the form of the size of the rate hike and the path for future increases, markets swung back and forth in the aftermath of the announcement as investors digested the news.

The S&P 500 lost 1.7 percent to 3,789, while the Nasdaq Composite lost 1.8 percent to 11,220. The Dow Jones Industrial Average fell 1.7 percent to 30,183.

"Markets were already braced for some hawkishness, based on inflation reports and recent governor comments," said Yung-Yu Ma, chief investment strategist at BMO Wealth Management.

"But it's always interesting to see how the market reacts to the messaging. Hawkishness was to be expected, but while some in the market take comfort from that, others take the position to sell." (Reuters)