By Riva Gold
A decline in energy shares helped carry U.S. stocks lower, a day after jitters about the U.S. presidential election helped send the S&P 500 to a sixth consecutive session of declines.
Stocks extended their losses slightly after the Federal Reserve left interest rates unchanged at the conclusion of its November meeting, as expected, and sent new hints it expects to raise rates in December.
The Dow Jones Industrial Average fell 67 points, or 0.4%, to 17970. The S&P 500 lost 0.6% and the Nasdaq Composite declined 0.9%.
Shares of energy companies were among the biggest decliners in the S&P 500, falling 1.7% as the price of U.S. oil dropped 3.3% to $45.12 a barrel. The losses cameafter inventory data showed a much larger-than-expected rise in crude stockpiles.
Tightening polls in the U.S. presidential race also continued to steer market sentiment. A Washington Post-ABC News tracking poll showed Republican candidate Donald Trump leading in the U.S. presidential race on Tuesday, sparking uncertainty after investors had broadly priced in a victory for Hillary Clinton.
With no Fed surprise, "elections are the main focus," said Philip Marey, U.S. strategist at Rabobank. "Until last Friday, markets had become a bit complacent and most people thought it would be very difficult for Trump to win," he said.
Now, global investors are worried about the uncertainty of a Trump presidency in terms of policy and the possible implications for trade, he said.
The Stoxx Europe 600 declined 1.1% after a downbeat close on Wall Street and in Asia, building on seven straight sessions of European declines. Losses were steepest in the auto and banking sectors.
Shares in Asia were red across the board, with Japan's Nikkei Stock Average shedding 1.8% as shares of exporters and banks fell, while Hong Kong's Hang Seng dropped 1.5%. Stocks in Australia fell 1.2%.
"I've covered a number of elections in my 20 years, but this has been the most fractious and difficult to watch," said Kully Samra, managing director at Charles Schwab. Still, he said, earnings and U.S. economic data should be more important for the market in the long run, he said, and an election-related selloff could be short-lived.
The CBOE Volatility Index, which measures investors' expectations for stock swings, was on track to climb for a seventh day, the longest such streak since December 2013.
As investors shied away from risk, the dollar fell 0.9% against the yen to Yen103.076, while gold for November delivery rose 1.6% to $1,306.80 an ounce, following on its biggest daily gain since September.
Sovereign bond yields, which move inversely to prices, came under pressure. The yield on the 10-year U.S. Treasury note fell to 1.778% from 1.822% on Tuesday, while 10-year German bund yields fell to 0.131% from around 0.18%, according to Tradeweb.
The broader WSJ Dollar Index, which measures the dollar against a basket of 16 currencies, fell 0.4% after three sessions of declines.
The Mexican peso, which has been sensitive to the U.S. election in part because of Mr. Trump's comments on trade, extended declines Wednesday. The dollar was recently up 1.3% against the peso.
While investors said they had expected the Fed to keep interest rates unchanged Wednesday, they were planning to parse the central bank's statement for signals about the course of rate rises.
Since there is no press conference this meeting, "We'll be looking at the language, phrases like 'at the next meeting' or 'in the next fewmeetings'," said Mr. Samra.
U.S. third-quarter growth figures came in slightly above expectations, while investors have pointed to a modest pickup in core inflation as a sign the Fed is likely to remain on course.
Shares of Electronic Arts rose 1.1% after the game publisher reported a jump in quarterly revenue and nudged up its outlook for the year. Facebook is due to report after markets close.
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(END) Dow Jones Newswires
November 02, 2016 14:38 ET (18:38 GMT)
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