Wall Street ended deep in the red territory after the U.S. Federal Reserve raised concerns about the economic outlook and maintained interest rates.
At the close, the Dow Jones Industrial Average (INDEXDJX:.DJI) had tumbled 1.4% to 15,944. The S&P 500 (INDEXSP:.INX) retreated 1.1% to 1,883, while the Nasdaq Composite (INDEXNASDAQ:.IXIC) tanked 2.2% to 4,468.
“Inflation is expected to remain low in the near term,” the Fed said in new, more cautious language, that suggests the central bank won’t be quick to raise interest rates again.
Large losses from corporate heavyweights Apple and Boeing after downbeat earnings accounted for much of the slump in the Dow industrials.
Apple sank 6.3% to $93.62, while Boeing declined 8.8% to $116.73.
Meanwhile, oil futures settled at a more than two-week high on Wednesday.
March West Texas Intermediate crude rose 2.7% to $32.33 a barrel on the New York Mercantile Exchange.
March Brent crude, the global oil benchmark, jumped 4.1% to $33.10 a barrel on London’s ICE Futures exchange.
FED DECISION
U.S. stocks added to earlier gains after the Federal Reserve maintained interest rates.
At 2:03 p.m. in New York, the Dow Jones Industrial Average (INDEXDJX:.DJI) was up 0.1% at 16,175.93. The S&P 500 (INDEXSP:.INX) rose 0.3% to 1,908.69, while the Nasdaq Composite (INDEXNASDAQ:.IXIC) was down 0.7% at 4,537.05.
The Fed said "economic growth slowed" since its last meeting in December and that inflation is unlikely to rise rapidly toward its 2% target.
"Inflation is expected to remain low in the near term," The Fed said.
The central bank also noted stock market turmoil in the U.S. and China, saying it "is closely monitoring global economic and financial developments."
The Fed, however, said it expects the economy to continue to grow "at a moderate pace," helped by a strengthening labor market. The vote was 10-0.
OPEN
Share falls in tech giant Apple (NASDAQ:AAPL) and airplane maker Boeing (NYSE:BA) helped pull US stocks lower on Wednesday at the bell as traders nervously await the Fed's first monetary policy decision of 2016.
The question is will there be another interest rate rise after the US made the decision to gently take the foot off the pedal late last year.
General consensus is 'no' in the light of tumbling markets and the oil price slide and Chinese growth issues but there were some voices last year that also thought it may be premature.
On Wall Street, the benchmark Dow Jones is down 115 points at the time of writing, at 16,051, while the broader S&P500 is down six points and the tech heavy Nasdaq is 31 lower at 4,537. In Europe there were slight gains , with the Footsie up 30 at 5,940, and the DAX up 26 to 9,852.
Oil prices are once again under pressure with US crude down 0.86% to US$31.18 a barrel.
It comes after data last night showed a surprise rise in crude inventories putting paid to rises in prices of the black gold yesterday.
The big story is Apple though and shares sank almost 5% in early deals in New York as the tech titan reported a slowdown in sales of the ubiquitous iPhone.
Also down was Boeing, which crashed 8.8% to US$116.71 as it missed market expectations in its fourth quarter of 2015.
The firm now forecasts lower-than-estimated 2016 core earnings, due to fewer commercial planes being delivered this year.
The company said it expects 2016 core earnings, which analysts had expected to be around US$9.43 per share to be between US$8.15 and US$8.35 per share.
PREVIEW
After gains yesterday, US shares are poised to start lower as oil prices slide again and as the globe's biggest tech company Apple (NASDAQ:AAPL) revealed a slow-down in iPhone sales.
Apple shares sank almost 4% in pre-market deals after it sold 74.8 million of its signature product in the three months to December 26, up 0.4% against a year ago - the weakest expansion since their launch in 2007.
But on the flip side, the firm reported earnings of $3.28 per share, beating the average analyst estimate of $3.23 per share and revenues increased 1.7%.
Shares on Wall Street closed up on Tuesday as a rise of crude cheered investors.
The Dow Jones finished 282 points ahead at 16,167, while the Nasdaq added 49 to 4,567. The S&P 500 gained over 26 points to 1,903.
But the cheer was short-lived as WTI crude is now down 3.4% to US$30.38 - under US$31 a barrel as fears over the global glut outweigh any hopes of a cut from producers and as new data is expected today from the American Petroleum Institute, which will show a further increase in stock piles.
Dow futures are down 55 at the time of writing, the S&P500 futures are around nine lower and the Nasdaq futures are 35 points lower.
It looks like Wednesday is going to be data-rich. Investors will be keenly eyeing the Fed's decision on policy after a two day meeting - due at 2pm ET - and whether there will be another interest rate hike - though this looks unlikely.
Meanwhile, a number of major players will be posting earnings ahead of the bell, including Fiat Chrysler (NYSE:FCAU), Boeing (NYSE: BA) and Tupperware (NYSE:TUP).