Stocks mostly fell yesterday as the Federal Reserve opened a two-day policy meeting, which is being closely watched for signs of when the US central bank will raise interest rates.
Trading was volatile in other asset classes. Crude oil prices edged lower and remained on track for their eighth decline in the past nine sessions, but were well off lows of the day. The US dollar index turned flat, rebounding off earlier weakness.
The euro, which recently hit a 12-year low, rose against the dollar for a second straight session, though it was off its session peak.
European equity markets retreated from gains built on the euro's decline, which cheapens the price of exports from the eurozone. London's market was an exception, and Asian markets ended higher.
US crude oil hit a six-year low of $42.63 a barrel before paring losses to trade down 0.2 per cent, at $43.79. The recent weakness has come on oversupply and the possibility that a nuclear agreement with Iran could add to the glut.
Brent crude fell 1.3 per cent to $53.22 per barrel. Investors were awaiting the release of the Fed's policy statement on Wednesday afternoon. Many analysts expect the Fed to remove the word “patient” from its statement to describe its approach to raising rates later in the year. Doing so would put the Fed a step closer to its first rate hike since 2006.
Economists polled by Reuters are almost evenly split on whether a rate increase will come in June or later in the year. Recent US data, including yesterday's on February housing starts, has fueled talk that the Fed will remain on hold as long as possible.
“A lot of today's decline is speculation on how the Fed will respond, along with the sense that (US) growth is weak,” said Bruce McCain, investment strategist at Key Private Bank.
The Dow Jones industrial average fell 137.69 points, or 0.77 per cent, to 17,839.73, the S&P 500 lost 9.54 points, or 0.46 per cent, to 2,071.65, and the Nasdaq Composite dropped 4.05 points, or 0.08 per cent, to 4,925.46.
The MSCI International ACWI price index slipped 0.2 per cent while European shares ended 0.7 per cent lower, a day after hitting a 7-1/2-year high. The benchmark 10-year US Treasury note rose 11/32 in price, pushing the yield down to 2.0594 per cent.
The euro rose 0.2 per cent to $1.0592, having earlier risen as much as 0.8 per cent. Earlier this week, the euro dropped to a 12-year low of $1.0457. The US dollar index, which measures the greenback against a basket of major currencies, was flat at 99.612. On Monday, the index posted its biggest drop in more than a month.
Gold prices fell 0.4 per cent while silver was down 0.4 per cent. Copper lost one per cent in its second straight decline.