"People are concerned about the Federal Reserve, the direction of interest rates, the health of the economy."

WASHINGTON, Sept. 27 (Xinhua) -- The U.S. S&P 500 closed at its lowest point this year on Tuesday, as U.S. Federal Reserve officials indicated they might continue to raise interest rates -- even to the point of triggering a downturn.

The index has fallen nearly 24 percent from a record high on Jan. 3 -- a drop that comes on the heels of last week's indications that the Fed could keep interest rates high through next year.

The Fed's newly released quarterly economic projections showed that the median FOMC (Federal Open Market Committee) projection for the federal funds rate at the end of this year has jumped to 4.4 percent, higher than the 3.4 percent projected in June.

To reach the median estimate, the Fed would need to lift rates by another 125 basis points at the next two meetings later this year.

The news is "disappointing, but it's not a surprise," Robert Pavlik, senior portfolio manager at Dakota Wealth in Fairfield, Connecticut, was quoted as saying by Reuters.

"People are concerned about the Federal Reserve, the direction of interest rates, the health of the economy," Pavlik said.

Meanwhile, the Dow Jones Industrial Average fell 125 points amid surging interest rates and volatile international currencies, although the Nasdaq ticked up a moderate 0.25 percent at the close of trading.

That occurred after the Dow hit bear market territory on Friday, falling 800 points at one point before ending the trading day down nearly 500 points.

This is the latest in several weeks of market decline, as investors fret over rate hikes the Fed is implementing to control the worst inflation in 40 years.

The losses reflect investors' fears that inflation is not fading as fast as they thought, which has prompted the Fed to go on an aggressive rate raising campaign.

Economists fret that the central bank could act too aggressively to tamp down inflation and trigger an increase in the jobless rate -- a move that could prompt a much steeper market drop.

Art Hogan, chief market strategist at B. Riley Financial, said: "We're still concerned that the Fed is going to overdo it and push the economy into recession," as quoted by CNBC.

"It seems that the Fed is unnecessarily risking the attainment of its employment objective by pursuing an overly aggressive monetary policy to regain control over inflation," Desmond Lachman, senior fellow at the American Enterprise Institute, told Xinhua.

Lachman believes that the Fed "might have been better served" by a 50-basis point interest rate hike last week and by "waiting to see the lagged impact" of its monetary policy tightening.

Lachman said that one reason to fear a "full-blown economic recession" is the acute difficulties already being experienced in the housing market.

Another reason for concern is that the Fed's hawkish monetary policy stance has already caused the bursting of the equity and credit market bubble, he said.