Dow, S&P Fall on US GDP Data; Dollar Pares Losses After Fed

New York: Stock markets worldwide fell on Wednesday after weak corporate results and data showing US economic growth braked more sharply than expected in the first quarter, while the dollar pared losses after a Federal Reserve policy statement.

Commerce Department data showed US gross domestic product expanded at an only 0.2 per cent annual rate, marking the weakest reading in a year, leading to a lower open on Wall Street.

The data hit European shares, which also suffered from weak corporate results from companies such as Delhaize and Norsk Hydro. The FTSEurofirst 300 index of top regional shares posted its biggest daily decline since early January.

"People are speculating that we are in a low patch after growing well over the last year, and the pace and momentum going in to the second quarter doesn't seem to be as strong as people expected," said Omar Aguilar, chief investment officer at Charles Schwab Management in San Francisco.

A stronger euro also weighed on European stock markets, with the currency hitting a roughly eight-week high against the U.S. dollar at $1.11880. The dollar index, which measures the greenback against a basket of six major currencies, hit a roughly nine-week low of 94.678 after the GDP data.

The dollar pared losses after the Fed's latest statement on monetary policy. While the Fed showed signs that it was struggling to proceed with its plans to raise interest rates this year, the central bank acknowledged slow economic growth during the winter months in part reflected "transitory factors," which supported the dollar.

The Dow Jones industrial average was last down 76.31 points, or 0.42 per cent, at 18,033.83. The S&P 500 was down 7.47 points, or 0.35 per cent, at 2,107.29. The Nasdaq Composite was off 25.61 points, or 0.51 per cent, at 5,029.81.

MSCI's all-country world equity index was last down 2.5 points or 0.56 per cent, at 440.13.

Europe's FTSEurofirst 300 index closed down 2.24 per cent at 1,581.94.

Oil prices hit their highest of the year after the first crude stock draw in five months at the US Cushing, Oklahoma hub suggested an oil glut may be starting to ease. Brent crude settled up $1.20 at $65.84 a barrel after hitting a high of $66.72. US crude settled up $1.52 at $58.58 a barrel after hitting a high of $59.33.

Safe-haven US government bond yields remained up after the Fed statement, but were off earlier highs, when a global bond selloff led to a spike in yields. Benchmark 10-year yields were last at 2.04 per cent after hitting 2.08 per cent earlier in the session, the highest since March 16.

"We breached the upper end of the trading range. People are looking to unload some longs," said Sean Murphy, a Treasuries trader at Societe Generale in New York, on the earlier selloff in Treasuries prices, which move inversely to yields.