Reuters - U.S. stocks fell on Wednesday after comments from Federal Reserve Chair Janet Yellen raised the possibility of an earlier- than-anticipated increase in interest rates.

The central bank dropped the U.S. unemployment rate as its definitive yardstick for gauging the economy's strength and made clear it would rely on a wide range of measures in deciding when to raise interest rates.

Equities extended declines after Fed Chair Janet Yellen said the "considerable period" between the end of its quantitative easing program, known as QE, and the first rate increase from the central bank could be six months.

With QE forecast to wind down sometime near the end of the year, a six-month lag would move up the timetable for the Fed's first hike, which many market participants had been expecting in the second half of 2015.

"She certainly moved it up a little bit, and I don't think the market was expecting that at all because she is widely viewed as being more on the dovish side of the aisle than she is on the hawkish side," said Peter Kenny, CEO of Clearpool Group in New York.

"That is not a particularly hawkish comment, but the fact of the matter is, it was not expected."

The Fed also said it would cut its monthly purchases of U.S. Treasuries and mortgage-backed securities to $55 billion, from $65 billion.

The S&P 500 was within 1 percent of its record closing high, though economic bellwether FedEx Corp hit a sour note in its outlook. Geopolitical concerns related to Ukraine also stayed in focus.

FedEx posted results below expectations and gave a weak full-year profit forecast, but the package shipper said it had been significantly hurt by winter storms, and the stock slipped 0.1 percent to close at $138.38.

The Dow Jones industrial average fell 114.02 points or 0.70 percent, to end at 16,222.17. The S&P 500 slipped 11.48 points or 0.61 percent, to finish at 1,860.77. The Nasdaq Composite dropped 25.711 points or 0.59 percent, to close at 4,307.602.

Equities had rallied to start the week, buoyed by easing geopolitical concerns, though trading volume has been light. The S&P 500 has climbed 1.7 percent over the previous two days, the best back-to-back performance for the benchmark index since early February.

First Solar Inc surged 20.6 percent to $69.40 and ranked as the S&P 500's best performer after the company forecast a rise of up to 21 percent in revenue this year. First Solar also said it was developing cost-effective solar plants with General Electric Co.

Volume was light, with about 6 billion shares traded on U.S. exchanges, below the 6.7 billion average so far this month, according to data from BATS Global Markets.

Volume is expected to surge on Friday as options expiration takes place alongside multiple index rebalances. Credit Suisse estimates $14 billion in gross trading will stem from the S&P 500 index rebalance, with another $6 billion coming from rebalancing in other indexes.

Declining stocks outnumbered advancing ones on the New York Stock Exchange by a ratio of 3 to 1. On the Nasdaq, nearly two stocks fell for every one that rose.