Stocks tumbled on Wednesday after the Federal Reserve said there were significant downside risks to the economy even as it took another stab at boosting growth.

The Fed, as expected, said it would buy more long-term Treasury securities in an effort to lower borrowing rates. But investors worry the Fed's latest plan will have little effect on lending in an economy that appears to be stagnating.

The Fed's $400 billion plan, dubbed Operation Twist by market participants, is the latest in a series of steps aimed at reviving an economy that has struggled to rebound from the 2008 financial crisis. Investors are less optimistic after previous efforts, particularly in light of the Fed's own statement pointing to economic risks.

That was probably the biggest statement when he said 'significant downside risks,' said Alan Valdes, director of floor operations for DME Securities in New York. Considering we've done over $1 trillion, and it hasn't moved the needle at all.

The Dow Jones Transportation Average <.DJT>, seen as a proxy for economic health, fell 5.3 percent. Railroad Norfolk Southern Corp slid 8.3 percent to $61.93.

The Dow Jones industrial average <.DJI> dropped 283.82 points, or 2.49 percent, to 11,124.84. The Standard & Poor's 500 Index <.SPX> lost 35.33 points, or 2.94 percent, to 1,166.76. The Nasdaq Composite Index <.IXIC> fell 52.05 points, or 2.01 percent, to 2,538.19.

The Fed said it would launch a $400 billion program that will tilt its $2.85 trillion balance sheet more heavily to longer-term securities by selling shorter-term notes and using those funds to buy longer-dated Treasuries.

The Fed said economic growth remains slow, and recent indicators point to continuing weakness in overall labor market conditions, and the unemployment rate remains elevated.

Operation Twist, the Federal Reserve's latest move to stimulate credit for consumers and businesses, could threaten the earnings of some of the country's largest insurers for years to come.

In contrast, there were a few bright spots in the tech sector.

Oracle Corp gained 4.2 percent to $29.54 a day after forecasting higher-than-expected earnings for the current quarter as well as robust sales. Earlier, Oracle climbed to $30.96, nearly an 8-week high.

Adobe Systems Inc rose 1 percent to $24.89 after forecasting fourth-quarter sales above estimates.

Hewlett-Packard Co shares jumped 6.6 percent to $23.96 after a source familiar with the matter said the company's board is considering ousting Chief Executive Officer Leo Apotheker after less than a year on the job, and replacing him temporarily with former eBay CEO Meg Whitman.

Trading was active, with about 8.85 billion shares traded on the New York Stock Exchange, NYSE Amex and Nasdaq, above the daily average of 7.91 billion.

Declining stocks outnumbered advancing ones on the NYSE by 2,577 to 437, while on the Nasdaq, decliners beat advancers 2,124 to 436.

(Reporting by Chuck Mikolajczak; Editing by Jan Paschal)