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Wall Street slid amid reports showing weakness in the outlook for US business spending, renewing concern the colder-than-usual winter might have slowed the pace of recovery in the world's largest economy after all.
In afternoon trading in New York, the Dow Jones Industrial Average fell 0.28 percent, the Standard & Poor's 500 Index dipped 0.11 percent, while the Nasdaq Composite Index shed 0.69 percent.
Declines in shares of IBM and JPMorgan Chase, last down 1.4 percent and 1.2 percent respectively, led the Dow lower.
Investors flocked to a US$35 billion auction of five-year US Treasuries. The sale's bid-to-cover ratio, a measure of demand, was the highest since September 2012, while the notes yielded 1.715 percent, the highest since May 2011, according to Bloomberg News.
Orders for durable goods rose 2.2 percent in February, according to Commerce Department data. However, the report also showed orders for non-military capital goods excluding aircraft unexpectedly dropped 1.3 percent, raising concern about business spending plans.
"First-quarter business investment looks to be soft, and it challenges some of the optimism surrounding the idea that capital expenditures were set to advance noticeably in 2014 from their 2013 pace," Omair Sharif, senior economist at RBS in Stamford, Connecticut, told Reuters.
Separately, Markit's preliminary, or flash, US services Purchasing Managers Index climbed to 55.5 in March, up from 53.3 last month
"Service sector activity rebounded in March after a weather-torn February, but the survey is clearly flashing some warning lights as to whether the economy has lost some underlying momentum and that growth could slow in the second quarter," Chris Williamson, chief economist at Markit, said in a statement.
"Even with the rebound, the two PMI surveys are merely consistent with annualised GDP growth of approximately 2.5 percent in the first quarter, largely unchanged on the disappointing 2.4 percent rate seen in the fourth quarter of last year," Williamson said. "Perhaps the most worrying signal is that new business showed the smallest monthly rise since late-2012."
Still, Federal Reserve Bank of St Louis James Bullard on Wednesday said the outlook for the US economy is "quite good," and that the unemployment rate will fall below 6 percent by the end of this year.
"The biggest thing is that unemployment has come down more quickly than expected," said Bullard, speaking on a panel at the annual Credit Suisse investor conference in Hong Kong, according to Reuters.
Shares of Facebook dropped, last down 5.9 percent, after the company said late Tuesday it agreed to buy Oculus VR, which makes virtual-reality headsets glasses for gaming, for US$2 billion.
"Mobile is the platform of today, and now we're also getting ready for the platforms of tomorrow," Facebook founder and CEO Mark Zuckerberg said in a statement. "Oculus has the chance to create the most social platform ever, and change the way we work, play and communicate."
In Europe, the Stoxx 600 Index ended the session 0.7 percent higher than the previous close. France's CAC 40 rose 0.9 percent and Germany's DAX added 1.2 percent. The UK's FTSE 100 closed a touch higher at 6,605.30.