Stocks finished near session lows in volatile trading Wednesday, with the Nasdaq snapping an eight-day winning streak, as investors digested minutes from the Fed's latest policy meeting.
(Read more: How mean winter weather could hurt stocks)
Major U.S. Indexes
The Dow Jones Industrial Average dropped 89.84 points, to close at 16,040.56 after rallying nearly 100 points earlier in the day. JPMorgan and Boeing led the laggards. The blue-chip index swung in a wide 194-point range.
The fell 12.01 points, to finish at 1,828.75. And the Nasdaq declined 34.83 points, to end at 4,237.95, snapping an eight-day win streak.
The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, jumped above 15.
(Read more: Watch out for resistance as Nasdaq climbs: Gartman)
The stock market was closed Monday for the Presidents' Day holiday.
Federal Reserve officials weighed whether it might be time to drop the notion that a 6.5 percent unemployment rate would be enough to consider raising rates, according to the latest meeting minutes.
The Fed Open Market Committee voted at the January meeting to reduce the pace of its monthly bond-buying program by another $10 billion to $65 billion a month.
"The FOMC is likely to stay on its course of measured reduction of its long-term asset purchase program provided incoming information suggest that the economy continues to grow at a moderate pace and financial conditions do not deteriorate," said Tanweer Akram, senior economist at ING Investment Management. "Most participants were determined to stay on course with the current pace tapering."
On the economic front, the Commerce Department said housing starts sank 16 percent to a seasonally adjusted annual rate of 880,000 units. The rate was the lowest since September. It was also the largest percentage drop in three years. The news came a day after home builder sentiment dropped 10 points, according to the National Association of Home Builders' monthly sentiment index, logging its biggest drop in the history of the survey, which started in 1985.
Separately, U.S. producer prices rose for a second straight month in January, pushed up by an increase in the cost of goods, but there was little sign of a broad pick-up in inflation pressures at the factory gate.
Meanwhile, natural gas futures rose to $6 per million British thermal units, hitting its highest level since December 2008, amid forecasts for continued cold weather across the U.S. that will further drive heating demand and deplete natural gas supplies.
Facebook hit a record high, trading nearly 19 percent above its 50-day moving average.
Among earnings, Telsa slumped ahead of reporting quarterly results after the closing bell. The electric car marker's stock hit an all-time high of $206 a share in the previous session.
(Read more: Tesla Motors earnings: 5 catalysts to watch)
Herbalife was higher a day after the nutritional-supplement company reported fourth-quarter earnings.
Zale spiked nearly 40 percent after Signet Jewelers said it would acquire its smaller rival for approximately $690 million.
Overseas, investors will be watching developments overseas amid unrest in Ukraine.
The European Union called an extraordinary meeting of its foreign ministers on Thursday as the violence in Ukraine escalates, with the bloc expected to impose sanctions on those responsible for the bloodshed in Kiev. President Barack Obama condemned the violence, warning the government that "there will be consequences" if people step over the line.
(Read more: Trading a stock picker's market)
—By CNBC's JeeYeon Park (Follow JeeYeon on Twitter: @JeeYeonParkCNBC)
Coming Up This Week:
THURSDAY: Consumer price index, jobless claims, Philadelphia Fed survey, leading indicators, natural gas inventories, oil inventories; Earnings from Wal-Mart, DirecTV, Hewlett-Packard, Priceline.com, Groupon, Newmont mining
FRIDAY: Existing home sales, Fed's Bullard speaks; Earnings from Dish Networks
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