Losses in Asia, which were initially slighter than declines seen stateside, steepened as the session progressed.
The Nikkei 225 declined 321.62 points, or 1.44 percent, to end at 22,068.24, paring some of its recent gains. The index slipped further into negative territory as the yen firmed during the session.
A miss in industrial output figures for January, which showed a steep fall of 6.6 percent on month, likely weighed on sentiment. That was below a median 4.2 percent decrease projected by Reuters.
Manufacturers, technology, automakers and financials traded in negative territory. Among large caps, Honda Motor fell 2.19 percent, SoftBank Group dropped 2.39 percent and Fast Retailing lost 2.52 percent.
Automakers and manufacturing names finished the session mostly lower.
Over in Australia, the S&P/ASX 200 finished the session 0.68 percent lower at 6,016, with just three out of its 12 sub-indexes closing in positive territory. Gold producers and telecommunications stocks were among the worst performing sectors while the heavily weighted financials sector slipped 0.55 percent.
Mining majors Rio Tinto and BHP closed lower by 0.55 percent and 1.96 percent, respectively.
Meanwhile, greater China markets extended losses after declining in the last session.
Hong Kong's Hang Seng Index fell 423.94 points, or 1.36 percent, to close at 30,844.72. Major financial stocks closed in negative territory, with heavyweights China Construction Bank and HSBC down 2.74 percent and 0.76 percent, respectively.
Tech giant Tencent, the most heavily weighted stock on the index, fell 3.09 percent by the end of the day, as other technology names similarly recorded declines.
Markets in mainland China were mixed: The Shanghai composite lost 0.99 percent, but the Shenzhen composite pared early losses to close higher by 0.16 percent. Meanwhile, the ChiNext start-up board climbed 0.44 percent by the end of the day.
Of note, official manufacturing PMI in China for the month of February stood at 50.3, below the 51.2 forecast by Reuters and the 51.3 figure seen in January. China's February PMI reading may be influenced by long Lunar New Year public holidays this year, as factories shut over the festive season.
Even so, the data released on Wednesday still point to a "clear slowdown" in early 2018, said Julian Evans-Pritchard, Capital Economics' senior China economist in a note.
MSCI's broad index of shares in Asia Pacific excluding Japan was down 1.13 percent by 3:39 p.m. HK/SIN.
Markets in Taiwan were closed for Peace Memorial Day.
US stocks fall on Powell comments
The moves came after Federal Reserve Chairman Jerome Powell's positive assessment of the economy during his testimony before Congress on Tuesday. Powell also indicated that the central bank raising interest rates more than three times was a possibility as inflation moves "up to target."
"The gist is that even as [Powell] espoused that the Fed will continue to normalize policy at a gradual pace, markets suspect his confidence could rub off to four rate hikes for 2018, instead of the three penciled in," Chang Wei Liang, a strategist at Mizuho Bank, said in a note.
U.S. Treasury yields rose on the back of those remarks, with the yield on the benchmark 10-year Treasury note standing at 2.9 percent during early Asian trade.
Following Powell's Tuesday testimony, the dollar index, which tracks the U.S. currency against a basket of rivals, was steady at 90.345 after bouncing in the last session.
Against the yen, the dollar pared overnight gains to trade at 107.06 at 3:34 p.m. HK/SIN, below Tuesday's close of 107.36. The move also came as Japan's central bank slightly reduced the amount of 25 to 40-year Japanese government bonds to 70 billion yen ($652 million) it offered to purchase, Reuters reported.
Meanwhile, the Australian dollar edged up after falling as low as $0.7780 in the last session with the firmer dollar. The Aussie dollar last traded at $0.7805.
In corporate news, South Korean steelmaker Posco fell 4.49 percent. The company said Tuesday that it would purchase a maximum of 240,000 tons of lithium concentrate each year from Australia's Pilbara Minerals, Reuters reported.
Meanwhile, shares of Australian retailer Harvey Norman plunged 12.45 percent after the company reported a 19.3 percent fall in first-half profit.
On the commodities front, oil prices extended losses after last session's declines. U.S. West Texas Intermediate crude futures slipped 0.38 percent to trade at $62.77 per barrel. Brent crude futures edged down by 0.23 percent to trade at $66.48.
Economic releases for the day included January retail sales out of Japan, which rose 1.6 percent on year, missing a 2.1 percent increase projected.
Ahead, the release of India's fourth-quarter GDP is expected later in the day at 8:00 p.m. HK/SIN.
— CNBC's Huileng Tan contributed to this report.
European stocks: Fed, earnings, inflation
All the other sectors traded mostly lower as investment sentiment continued to be influenced by Tuesday's remarks from Fed Chair Powell. The recently-appointed chairman said that it was possible the central bank could increase rates more than three times this year. Expectations of a more hawkish Fed are traditionally harmful to stocks as higher rates increase firms' costs.
Earnings; inflation down in the euro zoneLooking across the European benchmark, Dialog Semiconductor hit the top of the index, up by 9 percent after reporting its latest results. On the other hand, Biomerieux fell more than 9 percent after positing results.
Bayer saw its fourth-quarter net profit fall due to a tax overhaul in the U.S. The firm didn't add any details on the merger with Monsanto but said that wants to see the deal closed in the second quarter. The stock fell 3.3 percent.
Ahold Delhaize's net income grew more than four times in the fourth quarter compared to the same period a year ago. Shares rose 2.7 percent.
In terms of data, inflation in the euro zone dropped for the third month in a row in February. Consumer prices rose 1.2 percent in the region from a year ago, the lowest annual rate since 2016.
Dow closes 380 points lower, snaps longest monthly win streak since 1959
The Dow Jones industrial average closed 380.83 points lower at 25,029.20, with Caterpillar as the worst-performing stock in the index.
More than half of the day's losses came in the final hour of trading with the Dow losing more than 240 points in the final 60 minutes.
The S&P 500 pulled back 0.9 percent to close at 2,713.83, with energy as the worst-performing sector. The Nasdaq composite ended 0.8 percent lower at 7,273.01.
Jeff Kilburg, CEO of KKM Financial said the S&P 500 dipped below its 50-day moving average late in the session. "That forces some technical selling pressure and flushes out some weak longs," he said.
Earlier in the session, the S&P 500 and Nasdaq rose as much as 0.6 percent and 0.7 percent, respectively. The Dow gained as much as 166.12 points.
The Dow and S&P 500 snapped 10-month winning streaks, their longest since 1959. The Nasdaq posted a monthly loss for the first time in eight months. For the month, the Dow and S&P 500 closed lower by 4.3 percent and 3.9 percent, respectively. The Nasdaq closed February down 1.9 percent.
February was a volatile month for stocks. The major averages dipped in correction territory earlier this month, falling 10 percent from record highs set on Jan. 26. The move lower came as fears of rising inflation sent rates higher and sent market volatility surging after a year of unprecedented calm.
"The volatility is being caused by one overarching theme: The market doesn't know what to expect from the Fed," said Tom Essaye, founder of The Sevens Report. "There's uncertainty around that and it's going to continue for the next several months."
Stocks rose earlier on Wednesday as interest rates stabilized. On Tuesday, the 10-year U.S. note yield jumped about five basis points to over 2.9 percent after Federal Reserve Chair Jerome Powell hinted at the possibility of more than three rate hikes for 2018 in his testimony to Congress members.
Powell's testimony also sent stocks reeling. The Dow closed nearly 300 points lower, while the S&P 500 and Nasdaq finished the previous session down 1.3 percent and 1.2 percent, respectively.
"Valuations keep getting stretched," said Eric Ervin, CEO of Reality Shares. "As long as rates remain low, the market can justify them. But as rates go higher, then we have to have higher earnings growth. The question is can companies sustain this."
Powell is scheduled to testify in front of Congress again on Thursday.
In corporate news, home improvement retailer Lowe's reported weaker-than-expected quarterly earnings, sending the company's stock down more than 6 percent.
Booking Holdings — formerly known as Priceline — saw its shares spike more than 6 percent after reporting better-than-expected adjusted earnings.
Correction: Powell is scheduled to testify in front of Congress on Thursday. A previous version of this story misstated the day.