U.S. stock closed sharply lower Wednesday on the Federal Reserve's announcement that it will sell off short-term securities to try to boost the economy.

The Dow Jones Industrial Average closed down 284 points – 2.5 percent – to 11,125, while the Standard & Poors-500 was off 35 points – nearly 3 percent – to 1,167. The NASDAQ fell 52 points – more than 2 percent – to 2,538.

European stock prices also fell sharply.

London's Financial Times index ended down 75 points – 1.4 percent – to close at 5,288. The CAC-40 in Paris dropped 48 points – 1.6 percent – to finish at 2,936, while Frankfurt's DAX index lost 138 points – 2.5 percent – to end at 5,434.

New York gold closed at $1,805.50 an ounce – down $1.10.

The dollar was lower against both the yen and the euro.