Stocks volatile after Fed cuts another $10 billion

Stocks gyrated Wednesday after the Federal Reserve decided to cut bond purchases by another $10 billion to $55 billion per month.

(Read more: Fed eases back the throttle, changes tune on rates )

The $10 billion reduction was largely in line with market expectations. The decisions passed on an 11-1 vote, with Narayana Kocherlokota voting against.

The Fed dropped the unemployment rate as its definitive yardstick for measuring the strength of the economy and emphasized it would rely on other factors in deciding when to boost interest rates.

"The committee currently anticipates that, even after employment and inflation are near mandate-consistent levels, economic conditions may, for some time, warrant keeping the target federal funds rate below levels the committee views as normal in the longer run," according to the Fed.

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The Dow Jones Industrial Average (Dow Jones Global Indexes: .DJI) dropped in kneejerk reaction following the Fed announcement. The blue-chip index had been trading in a narrow 50-point range prior to the decision.

The S&P 500 (INDEX:^GSPC - News) and the Nasdaq (NASDAQ:^IXIC - News) also traded lower. The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, traded above 14.

All three major averages are still holding onto slight gains for March.

Fed Chair Janet Yellen's press conference is expected to follow at 2:30 pm ET. CNBC.com will be streaming Yellen's press conference live.

(Read more: If Yellen says this,stocks could rally: Cramer )

"The asset purchase reduction continues at the measured pace most wanted by the doves on the committee and we are about one month away from a 50 percent drop in the pace of QE," wrote Peter Boockvar, managing director at The Lindsey Group. "Forward guidance doesn't tell us when the Fed may raise short term interest rates, it just tells us what benchmarks must be met (however now vague) in order for them to happen. We have to take Fed forecasts of when these thresholds may be hit with a grain of salt based on their littered history of poor forecasting."

Among earnings, FedEx (NYSE:FDX - News) slipped after the shipping giant posted quarterly results that were below expectations , citing the severe winter weather. Its full-year forecast also fell short of consensus.

And Oracle (NYSE:ORCL - News) declined after the software giant also missed Wall Street estimates and as investors were concerned about increasing competition and slower tech spending .

Jabil Circuit (NYSE:JBL - News) and Vera Bradley (NASDAQ:VRA - News) are among notable companies slated to post earnings after the closing bell.

JPMorgan (NYSE:JPM - News) will sell its physical commodities business to Swiss trade house Mercuria for approximately $3.5 billion, according to Reuters. JPMorgan said it sees no material impact on earnings as a result of the deal.

Toyota (Tokyo Stock Exchange: 7203.T-JP) said it reached a $1.2 billion settlement with the Justice Department over its sudden acceleration problems.

First Solar (NASDAQ:FSLR - News) spiked to lead the S&P 500 gainers after the solar company forecast 2015 revenue above expectations. Separately, First Solar and General Electric (NYSE:GE - News) said they are developing a more cost effective photovoltaic power plant.

On the economic front, the U.S. current account deficit narrowed to $81.1 billion in the fourth quarter, dropping to a 14-year low, as exports hit a record high, according to the Commerce Department.

Major averages rose on Tuesday for a second consecutive day following upbeat data on the U.S. economy and after Vladimir Putin said Russia was not looking to divide Ukraine.

"In an environment where developed market governments are loathe to make policy decisions, investors have seemingly put more faith in financial markets," said Jack Ablin, chief investment officer at BMO Private Bank. "From a headlines perspective, troop buildups, the Russian annexation of Crimea and talk of the Cold War would have seemed to have set off a stock market selloff. Instead the S&P 500 has surged nearly two percentage points over the last two days, suggesting investors believe Crimea doesn't matter much."

On Wednesday, Vladimir Putin signed a treaty formally making Crimea part of the Russian Federation, but said he was not looking to take control of any other regions of Ukraine at a speech in front of parliament on Tuesday, helping to calm markets.

(Read more: Another Crimea? Ukraine's neighbor asks to join Russia )

Oil prices fell to around $106 a barrel, dipping to a six-week low, as concerns eased about an escalation of the Ukraine crisis and following a larger-than-expected gain in U.S. crude inventories.

-By CNBC's JeeYeon Park (Follow JeeYeon on Twitter: @ JeeYeonParkCNBC )

On Tap This Week:

WEDNESDAY: Yellen press conference; Earnings from Jabil Circuit, Vera Bradley
THURSDAY: Jobless claims, Philadelphia Fed survey, existing home sales, leading indicators, natural gas inventories; Earnings from Nike
FRIDAY: Quadruple Witching, 21st Century Fox shareholder mtg; Earnings from Darden Restaurants, Tiffany

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