So Janet Yellen is making one of her routine speeches this afternoon and, during the Q&A, she made a casual remark positing an opinion that the current stock market is overvalued.  A lot overvalued?  No.  In fact, it's just barely out of range of normal with the S&P having now reached 17 times earnings whereas the 10 year median is 15.  Yellen even made clear that this was nothing to get excited about, just something to keep an eye on.  But excitement (or panic) was exactly how investors reacted to these off-the-cuff comments.  As anyone who has taken Econ 101 is well aware, one way to calm down a rallying market is to raise interest rates.  Her remarks were thus taken exactly in that spirit with an immediate sell off of over 200 points.  Later in the session there was another big rally of 300 points such that at one point this afternoon the index was actually 100 points ahead, but soon after falling again to end 86 points down.  Yesterday's announcement of Germany raising interest rates on their bonds triggered a worldwide sell off of bonds which also contributed to today's panic and wild swings.  It is still the widely held consensus that the soonest hike will almost certainly not occur until September and, though the Fed has made numerous statements that any hikes at all will be both incremental and gradual, the panic is all due to fears that hikes may be big ones.  Volume was above average at 6.7 billion shares but below yesterday's frantic trading at 7.3 billion on the news the GDP might be shrinking.

Markets | Wed May 6, 2015 7:25pm EDT

Wall St. ends lower on global bond rout, Yellen warning

BY NOEL RANDEWICH

DJ:    17,841.98  -86.22      NAS:   4,919.64  -19.68        S&P:  2,080.15  -9.31

(Reuters) - U.S. stocks ended weaker on Wednesday after U.S. Federal Reserve Chair Janet Yellen warned of high valuations, adding to anxiety about future interest rates and a global bond rout.

The S&P 500 ended at a low not seen since early April after Yellen said high equity valuations could pose dangers, although she also said she does not see any bubbles forming.

Atlanta Federal Reserve bank president Dennis Lockhart said he still expects it will be appropriate to raise interest rates sometime in the middle of the year, and that market expectations of a September increase were in "reasonable alignment" with the central bank's likely path.

His and Yellen's comments came as investors try to pinpoint when the Fed will begin raising interest rates for the first time since 2006. An April payroll report later this week may affect when the Fed will make its move.

“Everyone is obsessed with the Fed,” said Michael Church, president of Addison Capital Management in Philadelphia. “It shouldn’t surprise anyone that we didn’t break out to new highs this week, given that you had Yellen speaking today and payrolls coming out on Friday.”

Most of Wall Street's top banks see the Federal Reserve holding off until at least September before raising interest rates, based on Reuters' most recent poll.

A worldwide drop in government bond prices also spread unease to Wall Street.

"Markets can handle slowly, gradually-rising interest rates as an economy continues to improve. The uncertainty is that these are pretty significant moves,” said Chuck Carlson, chief executive officer at Horizon Investment Services in Hammond, Indiana. "That's why you're starting to see stocks sell off a little more aggressively.”

Cutting losses of more than 1 percent in afternoon trade, the Dow Jones industrial average.DJI fell 86.22 points, or 0.48 percent, to 17,841.98, the S&P 500 .SPX lost 9.31 points, or 0.45 percent, to 2,080.15 and the Nasdaq Composite .IXIC dropped 19.68 points, or 0.4 percent, to 4,919.64.

Yellen's comments stung investors already nervous about stock prices. The S&P 500 currently trades at 17 times forward earnings, higher than its 10-year median of 15, according to Thomson Reuters StarMine.

With Wednesday's loss, the Dow was up just 0.11 percent in 2015 while the S&P was up 1.03 percent and the Nasdaq 3.88 percent higher.

Apple (AAPL.O) was the biggest drag on the S&P 500 on Wednesday, down 0.63 percent.

MoneyGram (MGI.O) ended up 21.41 percent after Western Union (WU.N) said it was not in talks to buy the company. Western Union gained 4.29 percent.

Declining issues outnumbered advancing ones on the NYSE by 2,087 to 1,003, for a 2.08-to-1 ratio; on the Nasdaq, 1,455 issues fell and 1,285 advanced, for a 1.13-to-1 ratio favoring decliners.

The S&P 500 posted 7 new 52-week highs and 6 new lows; the Nasdaq Composite recorded 29 new highs and 73 new lows.

About 6.7 billion shares changed hands on U.S. exchanges, below the 7.1 billion daily average for the last five sessions, according to BATS Global Markets.