* Fed to reduce stimulus by another $10 billion per month
* South Africa raises rates for first time in 6 years
* Boeing, Yahoo fall after results
* Dow down 1.2 pct; S&P 500 down 1 pct; Nasdaq off 1.1 pct
By Caroline Valetkevitch
NEW YORK, Jan 29 U.S. stocks accelerated their selloff in volatile trading on Wednesday after the Federal Reserve decided to further reduce its monthly bond purchases despite recent emerging market turmoil.
Stocks had been lower ahead of the announcement amid concerns that bold efforts by Turkey and South Africa to stabilize their currencies may not be enough to staunch a cycle of selling in emerging markets.
The Fed stuck to its plan to scale back stimulus, announcing a further $10 billion reduction in its monthly bond purchases.
Overall signs of improvement in the U.S. economy suggested that policymakers would continue to cut the purchases, but some investors had speculated in recent days the Fed might rethink their plan because of the emerging market problems.
"I think investors had hoped that the Fed would somehow respond to the recent turbulence and show they had their back," said Jack Ablin, chief investment officer of BMO Private Bank in Chicago.
The Fed said it would buy $65 billion in bonds per month starting in February, down from $75 billion now. In what was Fed Chairman Ben Bernanke's last policy-setting meeting, the central bank also maintained its longer-term plan to keep U.S. interest rates low for some time to come.
The Dow Jones industrial average fell 182.51 points or 1.15 percent, to 15,746.05. The S&P 500 lost 17.61 points or 0.98 percent, to 1,774.89. The Nasdaq Composite dropped 44.962 points or 1.1 percent, to 4,053.
Shares of Boeing Co ranked among the biggest drags on both the Dow and the S&P 500. The stock fell 6 percent to $128.90, though it reported a jump in quarterly profit.
Yahoo shares slid 8.2 percent to $35.09 after reporting results late Tuesday.
Most of the S&P 500's 10 sector indexes also declined.
The benchmark S&P 500 has lost ground in four of the past five sessions as fears over slowing growth in China and large capital outflows from developing markets prompted investors to seek safe-haven assets.
South Africa's central bank raised interest rates for the first time in six years. This followed a dramatic rate hike by Turkey's central bank, designed to defend its crumbling currency.