SAN FRANCISCO (MarketWatch) — U.S. financial stocks plummeted Wednesday after a series of debt downgrades in the banking sector the Fed’s statement from its most recent Federal Open Market Committee meeting. 
 
 /quotes/zigman/627445 BKX 39.02 , -0.57 , -1.44% 
 
 A sharp blow for bank stocks 
 
 The central bank said it would buy about $400 billion in Treasurys with remaining maturities of 6 to 30 years while selling an equal amount of securities with maturities of 3 year or less. Read more on the FOMC statement. 
 
 The Financial Select Sector SPDR ETF /quotes/zigman/246222/quotes/nls/xlf XLF -1.33% , which tracks the financial stocks in the S&P; 500, /quotes/zigman/3870025 SPX -1.11% fell 5%, after being down only 0.8% before the FOMC statement and up about 0.2% near the beginning of the session. Financial stocks ended the day as the worst performing sector in the S&P; 500. 
 
 The KBW Bank Index /quotes/zigman/627445 BKX -1.44% , which consists of the nation’s 24 leading banks and had also been down about 0.8% before the FOMC statement, closed down 5.5%. 
 
 A bad day for bank ratings 
 
 Financial stocks had already been up against the ropes before the FOMC statement after Moody’s kicked off a flurry of bank downgrades beginning with Bank of America Corp /quotes/zigman/190927/quotes/nls/bac BAC -3.26% . Losses in the banking sector quickened after Standard and Poor’s followed that up with a series of Italian bank downgrades. 
 
 Bank of America shares closed down 7.5% and were the worst performer on the Dow Jones Industrial Average /quotes/zigman/627449 DJIA -1.04% after Moody’s downgraded the bank’s long-term debt to Baa1 from A2. More on B. of A. downgrade. 
 
 Moody’s did not stop there, though. The ratings agency followed up its B. of A. downgrade by lowering the long-term ratings of Wells Fargo & Co. /quotes/zigman/239557/quotes/nls/wfc WFC -1.12% to A2 from A1. More on Wells Fargo. 
 
 Moody’s also cut the short-term ratings of Citigroup Inc. /quotes/zigman/5065548/quotes/nls/c C -2.59% to Prime-2 from Prime-1. 
 
 Click to Play Markets expect something new European markets are fixed on something other than their own problems, as investors everywhere wait to see whether the U.S. Federal Reserve will “twist” — selling short-dated debt in favor of longer maturities. 
 
 In all the Moody’s actions, the ratings agency cited the lower probability that the U.S. government would prop up the banks in the event of another financial crisis because of lower contagion risks even if a formerly “too big to fail” bank were allowed to fail. 
 
 While Moody�?s focused on U.S. banks, Standard & Poor�?s unleashed a series of downgrades on Italian banks following a cut in that country�?s sovereign debt rating earlier in the week. Read more on Italian bank downgrades. 
 
 MarketWatch First Take: The �?Buffett touch’ gets a downgrade. 
 
 Other financial-sector Dow components closed lower with J.P. Morgan Chase & Co. /quotes/zigman/272085/quotes/nls/jpm JPM -0.82% down 6%, shares of American Express Co. /quotes/zigman/217470/quotes/nls/axp AXP -1.43% fell 2.1% and Travelers Cos. shares /quotes/zigman/455344/quotes/nls/trv TRV -0.71% dropped 4.4%. 
 
 Other notable laggards on the sector included Morgan Stanley /quotes/zigman/182639/quotes/nls/ms MS -2.03% , SunTrust Banks Inc. /quotes/zigman/242272/quotes/nls/sti STI -1.08% and Lincoln National Corp. /quotes/zigman/232274/quotes/nls/lnc LNC -1.29% 
 
 The only S&P; 500 financial stock to close with a gain Wednesday was IntercontinentalExchange Inc. /quotes/zigman/373487/quotes/nls/ice ICE -0.66% with shares finishing up 0.3%. 
 
 Wallace Witkowski is a MarketWatch news editor in San Francisco. Greg Morcroft is MarketWatch's financial editor in New York. 

 NEW YORK (MarketWatch) -- U.S. stocks thudded lower at Thursday's start, with investors picking up on the Federal Reserve's gloomy take on the economy. The Dow Jones Industrial Average DJIA, -3.12% fell 313.78 points to 10,811.06. The Standard & Poor's 500 Index SPX, -3.19% declined 30.96 points to 1,135.80. The Nasdaq Composite Index COMP, -3.52% shed 65.98 points to 2,472.21.
– Should you need another reason to pack it in and go back to bed: After falling 284 points yesterday following the Fed's announcement of Operation Twist, which investors interpreted as yet another gloomy assessment of the economy, the Dow kicked off today by plunging even more—a lot more. The Dow fell 313 points at open to 10,811, reports MarketWatch. It's been down as much as 371 points since then. The S&P 500 and Nasdaq shed 31 and 66 points, respectively.