US stocks fell sharply on Wednesday after the Federal Reserve cut its 2008 growth forecast but suggested it had finished slashing interest rates for the time being, while another record crude oil price drove down retail and transport shares, dpa reported.
The US central bank predicted growth of between 0.3 per cent and 1.2 per cent for the year, down from a January projection of 1.3 per cent to 2 per cent.
The Fed's April decision to cut its benchmark interest rate by another quarter point to 2 per cent had been a "close call" as members weighed an economic slowdown against inflation risks, according to the minutes of the Federal Open Market Committee's meeting.
Retail and airline stocks plummeted as crude oil climbed above 133 dollars per barrel in New York trading, while financial shares continued to fall amid the ongoing credit crisis.
The blue-chip Dow Jones Industrial Average dropped 227.49 points, or 1.77 per cent, to 12,601.19. The broader Standard & Poor's 500 Index was down 22.69 points, or 1.61 per cent, to 1,390.71. The technology-heavy Nasdaq Composite Index lost 43.99 points, or 1.77 per cent, to 2,448.27.
The dollar fell to 63.34 euro cents from 63.79 euro cents on Tuesday and slipped against the Japanese currency to 103.06 yen from 103.18 yen.
Gold rose 8.40 dollars to 928.60 dollars per fine ounce.