The US Fed raised its target rate by a quarter point in its latest policy move and said it expects two more rate hikes for next year, down from three rate hikes previously.
The benchmark S&P 500 index has slumped 10.6 percent this month and is nearly 16 percent below the peak it reached in late September.
Inflation has remained low and stable and is ending the year a bit more subdued than most had expected.
Economists appear unified in the view that whatever the Fed does, it won't be influenced by the attacks Trump has made on the central bank and on Powell personally since the stock market began tumbling this fall.
Observing that neither the pace nor the ultimate destination of any further rate increases is predetermined, Powell said the Fed will adjust monetary policy as best it can to keep the expansion on track, the labour market strong and inflation near two per cent.
The Fed said in a statement it is raising the key borrowing rate to a range of 2.25 percent to 2.50 percent - the highest level in a decade, when the economy was in the early stages of the financial crisis and the beginning of the Great Recession.
But the slight revision was not enough to ease market fears over a further USA economic slowdown on the back of trade tensions, a waning boost from tax cuts and tightening monetary conditions for companies. The S&P 500 skidded 39.20 points, or 1.5 percent, to 2,506.96. And a renewed US push against alleged intellectual property theft by Chinese nationals is contributing to uncertainty over the direction of the simmering trade conflict.
Stocks are opening lower on Wall Street a day after the market took a big plunge.
As one 25 basis point rate hike would likely invert the yield curve, many market players are sceptical whether the Fed can raise rates at all next year.
"Political comments have played no role whatsoever in our decisions or discussions on monetary policy", Powell said on Wednesday, noting the Fed is an independent agency.
The reasoning for any shift in the Fed's communications, some analysts say, is that it may want to pause in its credit-tightening to assess how the economy fares in the coming months in light of the headwinds it faces.
The Dow fell 1.5 percent to 23,323.66.
"You can't just look at the headline which was two more rate hikes".
Separately, the District of Columbia sued Facebook for allowing Cambridge Analytica, a data-mining firm working for the Trump campaign, to improperly access data from as many as 87 million Facebook users.
Gross domestic product is forecast to grow 2.3 percent next year and 2.0 percent in 2020, slightly weaker than the Fed anticipated in September.
Oil Search, Woodside reversed early losses after the oil price bounced 0.8 per cent, and Santos was down 0.2 and one per cent.
In energy markets, benchmark USA crude rebounded 65 cents to $46.55 per barrel in electronic trading on the New York Mercantile Exchange.
The greenback slipped 0.6 percent to its 7-1/2-week low of 111.865, while the euro also gained a tad to $1.1397.
Major indexes fell more than 1 per cent in midday trading Thursday, bringing their losses over the previous six days to about 6 per cent. Brent crude, used to price global oils, slipped 5 percent to $54.35 a barrel in London.