US stocks tumbled overnight after the Federal Reserve raised concerns about the strength of the economy's slow recovery from recession.
Losses accelerated after the markets opened in the red. The Dow Jones Industrial Average was down 96.66 points (0.94 per cent) at 10,196.79 at 1.41am AEST.
The tech-rich Nasdaq index slid 25.97 points (1.15 per cent) to 2228.26 and the broad-market S&P 500 index lost 13.70 points (1.25 per cent) at 1078.34.
"The equity markets are under solid pressure in late-morning action," Charles Schwab & Co analysts said in a note to clients.
"Resurfacing euro-area debt fears are teaming up with carry-over uneasiness from yesterday's disappointing record plunge in US new-home sales, and the Federal Reserve's revision to its economic assessment, to sour global sentiment."
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The central bank's policy-setting Federal Open Market Committee yesterday left the key federal funds rate range between zero and 0.25 per cent.
The central bank policymakers have kept the record-low rate range since December 2008, a year after the economy entered recession, in a bid to stimulate growth.
"While no one was expecting a change in the rate, verbiage in the FOMC statement underscored increasing concerns over the strength of the economic recovery," Briefing.com analysts told clients.
"Specifically, the Fed stated that financial conditions have become less supportive of growth, where before it had said they were 'supportive'."
Two economic reports released before the markets opened came in slightly better than expected.
New orders for manufactured durable goods - items such as planes, cars, refrigerators and computers - fell 1.1 per cent in May, the Commerce Department said.
The decline was mainly due to commercial aircraft orders, an often-volatile factor in the monthly data. Analysts had expected a 1.3 per cent decline in orders.
The troubled labour market showed a glimmer of improvement. Initial claims for US unemployment benefits fell for the first time in three weeks, to 457,000 in the week ending June 19, a decrease of 19,000 from the previous week, the Labor Department said.
Most economists had expected claims to fall to 460,000.
Among stocks in focus, toy giant Hasbro added 2.26 per cent at $US42.05.
The maker of Transformers, GI Joe and Nerf toys confirmed reports it was approached by private-equity firm Providence Equity Partner for a buyout, but said it was not interested.
Sporting-goods giant Nike shed 3.75 per cent at $US69.80 after reporting quarterly sales below market forecasts.
Computer maker Dell plunged 5.43 per cent to $US13.07, despite issuing sales guidance in line with expectations.
In pharmaceuticals, Merck dipped 0.42 per cent to $US35.27 after winning Federal Drug Administration approval for its asthma treatment Dulera.
Pfizer tumbled 2.08 per cent to $US14.57. The firm yesterday suspended trials of a drug, tanezumab, to treat osteoarthritis following an FDA request.
The action came after stocks closed mostly lower yesterday after the FOMC rate announcement and official data showing new-home sales tumbled to a record low. The Dow edged up 0.05 per cent, the Nasdaq shed 0.33 per cent and the S&P 500 fell 0.30 per cent.
Bond prices climbed. The yield on the 30-year Treasury bond slid to 3.085 per cent from 3.115 per cent on Wednesday while that of the 30-year bond slipped to 4.044 per cent from 4.060 per cent. Bond prices and yields move in opposite directions.
Home sales take unexpected dipUS shares mixed ahead of housing data
