By Leah Schnurr
NEW YORK (Reuters) - Bond prices and equities fell while the dollar rose on Wednesday after Ben Bernanke laid out a blueprint for how the Federal Reserve could wind down its bond purchase program.
Bernanke said the Fed's policy-setting committee sees a likely reduction in the pace of purchases this year if the economic forecast comes in as expected. Purchases could end by the middle of next year.
U.S. stocks and bond prices fell during the press conference, which gave a more clear direction on the Fed's plans, although Bernanke was careful to say that the Fed would adjust its policy according to the economic data.
Bond prices took the harder hit, with both 10-year and 30-year Treasury bonds falling more than 1 point in price. Yields on the 10-year rose to a 14-month high.
U.S. stocks were down more about 1 percent in late-afternoon trading, while the MSCI world equity index lost 0.9 percent.
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The Fed's quantitative easing program, known as QE, has been a main driver in the equities market rally this year, which has pushed the benchmark S&P 500 up about 15 percent.
Bernanke had rattled markets last month with comments that raised worries the current QE program could be slowed sooner than had been expected.
"I was surprised he addressed the issue of tapering, since last time he did we saw a fairly significant market hiccup," said Randy Bateman, chief investment officer of Huntington Asset Management in Columbus, Ohio.
"If the economic growth we have is sustainable without the Fed, that's good news," Bateman added. "But it is hard to wean the system off the easy money."
The Dow Jones industrial average dropped 151.43 points, or 0.99 percent, at 15,166.80. The Standard & Poor's 500 Index was down 16.09 points, or 0.97 percent, at 1,635.72. The Nasdaq Composite Index was down 27.39 points, or 0.79 percent, at 3,454.79.
Benchmark 10-year Treasuries were last off 38/32 in price to yield 2.32 percent. The 30-year bond was more than 2 points lower in price to yield 3.42 percent.
The U.S. dollar rose to a one-week high against the yen and was recently up 1.6 percent at 96.85 yen. The euro last traded at $1.3283, down 0.8 percent.
(Editing by Dan Grebler and Chizu Nomiyama)