The Federal Reserve's decision to hold interest rates came as no surprise. However, it was Fed Chair Jerome Powell's statement after the Fed's monthly meeting on Wednesday that turned heads.

With analysts confident of a fourth straight month of no rate hikes, some were caught off guard by Powell's comments about future rate cuts. Widespread speculation was that the first rate cut could come in March.

"I would tell you that I don't think it's likely that the committee will reach a level of confidence by the time of the March meeting to identify March as the time to do that," Powell said. "But that's to be seen."

Financial markets, which have been on a roll to start 2024, reacted negatively to Powell's outlook. The Dow Jones Industrial Average, fresh off a record-setting territory of 38,000 points, fell 317 points (-0.82%) on Wednesday.

Also coming off a record high, the S&P 500 lost 79 points (-1.61%). But the biggest loser was the tech-heavy Nasdaq Composite, which slipped 345 points (-2.23%), wiping out a month of gains fueled by tech giants.

Powell cautioned that the decision to cut rates would be based on the data as the central bank continues to target an inflation rate of 2%. Recent data has been encouraging but there have also been some mixed messages.

The Fed's next two policy meetings are set for March 20 and May 1, meaning rate relief could be months away.