Slowing demand in China knocked world markets, pushing stocks on Wall Street down in a global retreat.
However, a small easing step taken by the US Federal Reserve to boost the economy pared losses.
The Federal Open Market Committee says it will reinvest maturing mortgage-backed securities back into the market so that its balance sheet does not shrink.
As expected, the Fed kept its benchmark interest rate at a record low level, making no changes to the key pledge to keep rates "exceptionally low" for an "extended period."
The Dow Jones Industrial Average reacted quickly to the 6.15am (NZ time) announcement, regaining almost all its pre-announcement drop of 105 points.
But that rally ran out of steam and at the close it was down 54.50 points, or 0.5%, at 10,644.25.
Earlier, the blue chip index was weighed by a 4.1% drop in bellwether technology share Intel after JP Morgan Chase cut earnings estimates.
Its analysts say checks with technology companies in Taiwan "indicate order rates from the PC end market deteriorated sharply" during the last part of July.
The Nasdaq Composite closed 1.2% lower at 2277.17 and the S&P 500 index was down 0.6% at 1121.07.
Other markets: Europe, Asia down
European stocks retreated on weak Chinese trade data and nervousness ahead of the Fed's policy meeting.
The Stoxx Europe 600 index closed down 0.9% at 259.93. The UK's FTSE 100 index fell 0.6% to 5376.41, France's CAC-40 index ended down 1.2% at 3730.58, and Germany's DAX dropped 1% to 6286.25.
Basic-resource shares suffered the brunt of the selling. Among stocks in the sector, Vedanta Resources fell 4%, BHP Billiton dropped 2.3%, Xstrata slipped 3% and ArcelorMittal lost 1.4%.
Chinese shares suffered their worst decline in more than a month. The Shanghai Composite Index dropped 2.9% to 2595.27.
Hong Kong's Hang Seng Index fell 1.5% to 21473.60, just its second loss in 16 trading days.
Japan's Nikkei Stock Average dropped 0.2% to 9551.05, Australia's S&P/ASX 200 gave up 1.2% to 4540.74, Korea's Kospi fell 0.5% to 1781.13 and India's Sensex declined 0.4% to 18219.99.
Commodities: Oil down, gold up
Light, sweet crude for September delivery fell $US1.26, or 1.6%, to $US80.22 a barrel in New York, gaining slightly after the Fed announcement. Brent crude on the ICE futures exchange traded $US1.87 lower at $US79.12 a barrel.
The most actively traded gold contract for December delivery was up $US8.40, or 0.7%, to $US1206.40 an ounce in New York.
Currencies: Dollar up, euro down
The dollar rallied broadly as investors abandoned currencies closely tied to the pace of global economic growth.
The Australian, Canadian and New Zealand dollars weakened sharply against the greenback on the fear that slackened Chinese consumption could stymie a global economic recovery, while the UK pound tumbled after a poorly received government bond auction and weaker-than-expected UK housing data.
The euro had weakened to $US1.3095 from $US1.3228 late on Monday. The dollar was flat at ¥85.85 from ¥85.89.
The euro moved to ¥112.42 from ¥113.61. The UK pound weakened to $US1.5768 from $US1.5906.
Wed, 11 Aug 2010