European markets rose after the UK and Norway raised interest rates and the ECB scaled back its extensive bond-buying program.
In the United States, recent reports of rising producer and consumer prices and the fast-spreading Omicron variant of the coronavirus fueled unrest.
The Fed's announcement on Wednesday that it would end its pandemic-era stimulus measures sooner than previously announced drove investors into more economically sensitive sectors and away from tech stocks, hurting the Nasdaq and S&P 500.
Oil prices hovered above $ 75 a barrel on the back of record-breaking US demand and falling crude oil inventories, as well as the Fed's positive economic outlook.
The pound sterling and UK bank stocks both rose after the BOE hiked interest rates 0.15 percentage points to 0.25%, while the Turkish lira suffered another setback after the Turkish central bank continued to cut rates.
The pan-European STOXX 600 index rose 1.23%, while the MSCI index for stocks from around the world fell 0.26%.
The Dow Jones Industrial Average fell 85.77 points or 0.24% to 35,841.66 points, the S&P 500 lost 51.78 points or 1.10% to 4,658.07 points and the Nasdaq Composite fell 431.41 points or 2.77% to 15 134.17 points.
US crude was trading 2.13% higher at $ 72.38 a barrel, while Brent was trading 1.54% higher at $ 75.02.
The dollar index declined 0.317% while the euro rose 0.28% to $ 1.1317. The pound sterling was last traded at $ 1.3304, up 0.31% for the day.
The 10-year US yield was 1.4241%, the 30-year yield was 1.8586.
The Fed had outlined a scenario in which, despite the Omicron surge, the pandemic gives way to favorable economic conditions, where inflation largely eases by itself, interest rates rise slowly and unemployment remains low.
Data released Thursday showed that the number of Americans filing new unemployment benefits rose slightly over the past week, although it remained at levels suggestive of tension in labor market conditions.
Separately, a poll showed that production at U.S. factories rose to its highest level in nearly three years in November.
"It's hard to get excited about this round of economic data after (Wednesday's Fed meeting), but so far it has largely supported the Fed's Hawkish stance," said Edward Moya, an analyst at OANDA.
The ECB announced in Frankfurt that it will reduce its bond purchases as part of its EUR 1.85 trillion emergency pandemic purchase program (PEPP) in the next quarter and that the program will expire by March, which had been announced for a long time.
However, it will reinvest PEPP profits by the end of 2024 and top up the longer-running but more rigid Asset Purchase Program (APP) to limit the effects of the withdrawal.
"Overall, the new approach to quantitative easing (QE) is slightly dovish," said Gurpreet Gill, macro strategist, global fixed income, at Goldman Sachs (NYSE: GS) Asset Management.
The Norwegian central bank, which raised interest rates in September on the back of an economic upswing, led the way with another hike as expected and said more should follow. The Swiss National Bank left its interest rates at -0.75%.
The Turkish lira plunged as much as 5.6% to a record low of 15.689 against the dollar on Thursday after the central bank cut its key rate in line with President Tayyip Erdogan's unorthodox economic program.
The value of the dollar has more than doubled against the lira this year, rocking Turkey's large emerging market economy. There is growing concern about what could happen if low interest rates and stimulus measures leading up to the 2023 presidential election continue to drive inflation, which is already above 20%.
