Stocks posted solid losses on Wednesday as investors got mixed signals from the Federal Reserve over the possibility of an interest rate hike in September. Energy stocks fell as the price of oil plummeted.
The Dow Jones industrial average lost 162.61 points, or 0.9 percent, to 17,348.73. The Standard & Poor's 500 index lost 17.31 points, or 0.8 percent, to 2,079.61 and the Nasdaq composite index lost 40.30 points, or 0.8 percent, to 5,019.05.
The minutes from the Federal Reserve's July meeting gave no specific clues on whether the central bank's officials were poised to raise interest rates in September. Stocks recovered some of their losses after the release of the Fed minutes, but the modest recovery dissipated and the market basically ended the day roughly where it was most of the session.
In the minutes, Fed officials appeared to move closer to raising interest rates for the first time in nearly a decade but remained concerned that the economic slowdown in China could pose risks to the U.S. economy. Policy makers also expressed concerns that inflation, noting the recent sharp decline in commodity prices, remains too low to justify an interest rate increase.
"We don't come away from the minutes feeling more confident about our call for a September rate hike as we might have hoped," said Michelle Girard, an economist at RBS.
Bond yields fell sharply as bond traders took the Fed minutes as a sign that interest rates were going to remain at near-zero levels for several more months. The U.S. 10-year Treasury note fell to a yield of 2.12 percent from 2.19 percent on Tuesday. Most traders believe the Fed will either raise interest rates in September or wait until early 2016.
"In their heart of hearts Fed officials want to raise interest rates this year. But with commodity prices as low as they are, it could give the Fed pause," said Alan Rechtschaffen of UBS.
Benchmark U.S. crude dropped $1.95 to $41.17 a barrel in electronic trading on the New York Mercantile Exchange. Brent crude, a benchmark for international oils used by many U.S. refineries, fell $1.96 to $46.88 per barrel. Oil's losses deepened after data from the U.S. government showed oil inventories rose much more than expected last week.
Energy stocks followed crude oil lower. Marathon Oil fell 7 percent, Chevron fell 3 percent and Exxon Mobil fell 2 percent, respectively.
In other futures trading on the NYMEX, wholesale gasoline fell 8.8 cents to close at $1.559 a gallon. Heating oil fell 4.1 cents to close at $1.518 a gallon. Natural gas rose 1.2 cents to close at $2.716 per 1,000 cubic feet.
Overseas, China's stock market roiled Asian and European stocks, on fears that the country's currency, the yuan, will continue to erode. Chinese stocks ended higher but only after a turbulent day that included sharp losses early on. The Shanghai Composite Index closed up 1.2 percent after plunging as much as 5 percent. European stocks ended the day down roughly 2 percent.
The euro rose to $1.1065 while the dollar was down against the Japanese Yen at 124.08 yen.