Just like Wall Street, the Federal Reserve has been closely watching developments overseas. But that acknowledgement of troubles abroad sent markets spiraling on Wednesday afternoon.
Stocks slumped to session lows in the final hours of trading after the Fed's statement from its latest policy meeting. The S&P 500 was down 1.1%, and the Dow Jones Industrial Average fell 1.4%, while the Nasdaq tumbled 2.2%.
"The Fed is specifically acknowledging that they're closely monitoring global economic and financial developments and the implications that it may have to their dual mandate and the balance of those risks," Bill Northey, chief investment officer of the Private Client Group at U.S. Bank, told TheStreet.
What was even more worrying to investors, the central bank kept a potential March rate hike in play. However, they did downgrade their outlook for U.S. household spending and business investment and noted that economic growth slowed to end last year.
"The Fed appears to be less confident about their relatively optimistic growth and inflation outlook that underpinned their decision to raise rates in December," said Millan Mulraine, deputy chief U.S. macro strategist at TD Securities. That places "a greater burden on the evolution in the economic data and global developments to support any further action."
The Fed kept its federal funds rate at 0.25% to 0.5% following the conclusion of its January meeting.
Worries over the global economy triggered a fresh wave of selling in shares that were already significantly lower on Wednesday. Apple (AAPL) - Get Report , the world's largest company, slid 6.6% to its worst close since mid-2014. Shares were already lower after sales fell for the first time since 2003. The tech giant announced its slowest growth in iPhone shipments on record.
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Boeing (BA) - Get Report tumbled 9% Wednesday after issuing weaker-than-expected guidance. The company expects full-year earnings between $8.45 and $8.65 a share, below forecasts of $9.41 a share. Boeing previously announced that it would cut production of its jumbo 747-8 jetliner to six a year, half previous output, starting in September.
Crude oil prices climbed above $32 a barrel on reports Russia's state-owned oil company Transneft and the Organization of the Petroleum Exporting Countries could make production cuts. Reports have yet to be confirmed, according to Reuters.
Prices were under pressure earlier after weekly inventories rose at a much faster pace than expected. Crude inventories increased by 8.4 million barrels, more than double estimates of 3.3 million. By midday, West Texas Intermediate crude oil added 2.7% to $32.30 a barrel.