Wall Street stocks slid on Wednesday after the Federal Reserve signalled that more time was needed to cut interest rates, disappointing investors who had hoped for a speedy policy shift.

Major indices finished the day decisively lower, with the S&P 500 down 1.6 percent at 4,845.

The Dow Jones dropped 0.8 percent to 38,150, while the Nasdaq tumbled 2.2 percent to 15,164.

Fed Chairman Jerome Powell said the central bank was unlikely to lower interest rates in March. He pointed to progress in the battle to lower inflation to its two percent target, while saying more improvement was needed.

"We believe that our policy rate is likely at its peak for this tightening cycle," Powell told reporters at a press conference after the rate decision.

He added that "almost everyone" on the Fed's rate-setting committee was in favour of a cut in 2024, but that a move as soon as the next meeting in March was unlikely.

The Fed's communication was "less dovish than expected, suggesting that the interest rate cutting cycle may start later than many traders were anticipating," said a note from Matt Weller of Forex.com.

While all 11 sectors of the S&P 500 finished in the red, tech shares were especially weak despite solid earnings from Microsoft and Google parent Alphabet. The results were not strong enough to extend a months-long sector rally over artificial intelligence.

Alphabet shares closed 7.4 percent down, while Microsoft lost 2.7 percent.

But Boeing jumped 5.3 percent, regaining some ground despite reporting its fifth straight annual loss. (AFP)