It was the S&P 500's worst day of January — and the year.

What happened: Federal Reserve chair Jerome Powell doused market hopes that the Fed could cut rates in a couple of months.

• His comments Wednesday afternoon took the wind out of the sails of the S&P, which had already opened down. It dropped even further, ending with a loss of 1.6%.
• It was the market's worst day since September.

State of play: The Fed left interest rates unchanged, and at the post-decision news conference, the policymaker was asked about the prospect of a rate cut in the near term.

• "I don't think it's likely that the committee will reach a level of confidence by the time of the March meeting," he responded.
• As recently as a month ago, the Fed funds futures market was pricing in odds of more than 70% that the Fed would cut in March.

Yes, but: The broad stock market index was still up for the month, rising 1.6%. The Nasdaq was up about 1%.

What to watch: The Russell 2000 index of small-cap stocks. It is viewed as being a barometer of sentiment on the domestic economy rather than the more globally sensitive large-cap indexes, which aren't as reliant on the U.S. economy.

• The Russell was down 3.7% in January despite very decent economic data releases and seems worth keeping an eye on.