US stock indexes plummeted Tuesday to close with major losses after the Federal Reserve Chair signaled a faster conclusion of tapering asset purchases against rising inflation. 

The blue chip Dow Jones Industrial Average dove 652 points, or 1.86%, to 34,483, while the S&P 500 fell 88 points, or 1.9%, to 4,567.

The tech-heavy Nasdaq declined 245 points, or 1.55%, to 15,537.

"The economy is very strong and inflationary pressures are high. It is therefore appropriate in my view to consider wrapping up the taper of our asset purchases perhaps a few months sooner," Fed Chair Jerome Powell said earlier during his testimony before the Senate Banking Committee.

Powell said Federal Open Market Committee (FOMC) members will discuss the possibility of concluding tapering quicker at their next meeting on Dec. 14-15.

The FOMC announced after the conclusion of its two-day meeting on Nov. 3 that it will start winding down its $120 billion asset purchases this month and it is expected to be concluded by mid-2022.

The faster conclusion of tapering will result in a quick withdrawal of liquidity from the markets, which was abundant during the pandemic and following months.

With heightened risks in liquidity, the VIX volatility index, known as the fear index, jumped 18.5% to 27.21.

The dollar index was down 0.5% to 95.88, while the yield on 10-year US Treasury notes fell 5.9% to 1.439%.

With the potential risk of lower global oil demand due to the new omicron variant, oil prices were down more than 4%. The price of Brent crude fell 4.5% to $69.93 per barrel and US benchmark West Texas Intermediate crude lost 4.5% to $66.81.

Despite earlier gains, precious metals reversed course, with gold losing 0.7% to $1,772 an ounce and silver falling 0.4% to $22.81./aa