US STOCKS-Nasdaq posts biggest daily drop since Feb after 'hawkish' Fed minutes

U.S. stocks fell sharply on Wednesday, with the Nasdaq plunging more than 3% in its biggest one-day percentage drop since February, after U.S. Federal Reserve meeting minutes signaled the central bank may raise interest rates sooner than expected.

The S&P 500 fell more than 1%, its biggest daily percentage decline since Nov. 26, the first day of trading after news of the Omicron variant of the coronavirus.

The S&P 500 and Nasdaq quickly extended their declines after the release of the minutes, which investors viewed as more hawkish than they had feared. The Dow, which hit a record high earlier in the day, reversed course and ended down more than 1%.

The selloff was broad, with all S&P sectors ending in the red, and Wall Street's fear gauge, the Cboe Volatility index , closing at its highest level since Dec. 21.

In the minutes from the Fed's Dec. 14-15 policy meeting, central bank policymakers said a "very tight" job market and unabated inflation might require the Fed to raise rates sooner and begin reducing its overall asset holdings as a second brake on the economy. $Nasdaq Composite Index(.IXIC.US)$ $Invesco QQQ Trust(QQQ.US)$ $S&P 500 Index(.SPX.US)$