US stocks traded sharply lower on Wednesday, with the Dow Jones Industrial Average plunging more than 800 points, while the S&P 500 and Nasdaq also slipped, as investors pared risk ahead of the US Federal Reserve's interest rate decision and rising oil prices fuelled inflation concerns.
The Dow Jones Industrial Average was down 801.14 points, or 1.52%, at 51,946.18 in late morning trade. The S&P 500 declined 53.13 points, or 0.72%, to 7,375.65, while the Nasdaq Composite fell 233.43 points, or 0.94%, to 24,643.48.
The weak opening marked a reversal from gains indicated by futures earlier in the day, as traders reassessed risks ahead of the Fed's policy announcement.
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The U.S. central bank is widely expected to leave interest rates unchanged. However, investors remain alert for any change in the Fed's guidance on inflation, growth and the path of future rate moves. Markets have also priced in the possibility of a surprise rate increase, although expectations remain relatively modest.
Treasury prices paused after a three-session rally, while the U.S. dollar traded little changed as investors waited for clarity from policymakers.
Apart from the Fed, quarterly earnings from Meta Platforms Inc. and Microsoft Corp. are expected to drive market sentiment later in the day. The two technology giants are among the biggest beneficiaries of the artificial intelligence boom, with investors closely watching whether continued heavy spending on AI infrastructure is translating into stronger financial returns.
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Oil prices also moved sharply higher after renewed geopolitical tensions in the Middle East resurfaced. Brent crude climbed about 4.3% to $90 a barrel after reports of fresh military action involving Iran, the U.S. and Tehran-backed militias, reversing part of the steep losses recorded earlier this week.
The rebound in crude prices revived concerns that higher energy costs could complicate the Federal Reserve's efforts to bring inflation back to its 2% target.
European equities were mixed, with the pan-European Stoxx 600 giving up early gains to trade lower amid a busy earnings calendar.
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