NEW YORK - US stocks saw deep losses on Wednesday, as investors digested the Federal Reserve's latest policy decision and hotter-than-expected inflation data.

The Dow Jones Industrial Average fell 1.63 percent to 46,225.15, dropping to a new low for the year. The S&P 500 sank 1.36 percent to 6,624.7. The Nasdaq Composite Index shed 1.46 percent to 22,152.42.

All 11 primary S&P 500 sectors ended in the red. The consumer staples and consumer discretionary sectors led the laggards, losing 2.44 percent and 2.32 percent, respectively. The energy sector posted the narrowest decline, edging down by 0.16 percent.

The market sell-off followed the Fed's decision to maintain its benchmark interest rate in a target range of 3.5 percent to 3.75 percent.

"The implications of developments in the Middle East for the US economy are uncertain," the Federal Open Market Committee said in a statement. "The Committee is attentive to the risks to both sides of its dual mandate." Despite the cautious tone, the Fed signaled that it still anticipates one interest rate cut this year.

"The forecast is that we will be making progress on inflation, not as much as we had hoped, but some progress on inflation," Fed Chair Jerome Powell said during a press conference.

"I always have to point out that that was a 1970s term, at a time when unemployment was in double figures and inflation was really high," Powell said of stagflation. "We actually have unemployment really close to longer-run normal, and we have inflation that's one percentage point above that."

Adding to the headwinds, the US Bureau of Labor Statistics reported Wednesday that the producer price index, a measure of wholesale pipeline costs, increased by a seasonally adjusted 0.7 percent in February. The core index, which excludes volatile food and energy costs, rose 0.5 percent month on month.

"We think there is a greater chance that today's energy shock is demand destructive in that households have less discretionary spending power. This should diminish the chances of broader, more persistent inflation," analysts at ING Bank wrote Wednesday.

The gloomy economic outlook weighed heavily on most sectors, with all of the "Magnificent Seven" tech giants closing lower, led by a 2.48-percent drop in Amazon.