While you were sleeping: UPDATED US shares fall as Fed leaves rates steady

Stocks on Wall Street dropped after the US Federal Reserve raised concerns about the economic outlook but didn’t rule out a March rate increase.

While leaving interest rates unchanged, as expected, the Fed signalled renewed concern about market turbulence and global growth in its statement on monetary policy.

The Dow Jones Industrial Average dropped 222.77 points, or 1.4%, to 15944.46 as declines in Boeing and Apple also weighed. The S&P 500 slipped 1.1% to 1882, and the Nasdaq Composite declined 2.2% to 1882.

In their first monetary policy decision of the year, the Fed officials indicated they still believed the economy was on track to grow, but were agnostic on whether the outlook has fundamentally shifted in light of developments since the last meeting, a sign of some lack of conviction about their economic forecasts.

The moves came as oil prices surged in the wake of key data that showed a smaller-than feared increase in crude-oil stockpiles. US crude oil advanced 85USc to $US32.30 a barrel.

Brent crude oil jumped after Russia said it was in talks about output cuts with Saudi Arabia and other OPEC countries.

Also helping oil was a report showing stockpiles at the biggest US storage hub dropped for the first time in 12 weeks.

"Stocks are now trading based on economic and profit activity and oil represents a good barometer of economic activity," Centre Funds chief investment officer James Abate told Reuters.

Boeing shares fall
In the Dow, gains in shares of Verizon Communications and those of Goldman Sachs Group, up 2.1% and 1.9% respectively, offset slumps in shares of Boeing and those of Apple, down 8.1% and 4.9%.

Shares of Boeing slumped after the company released a 2016 earnings outlook that fell short of expectations. The company said it expected to deliver between 740 and 745 planes this year, down from a record 762 in 2015.

Shares of Apple fell after the company posted disappointing growth in its iPhone sales.

"We are looking for March to mark the trough in year-on-year iPhone unit growth, which should provide an attractive entry point into the stock," Goldman Sachs analysts wrote in a note, according to Reuters.

Meanwhile, the latest US housing data offered evidence of strength in the industry. A Commerce Department report showed sales of new single-family homes jumped 10.8% to a seasonally adjusted annual rate of 544,000 houses, the highest level in 10 months.

"Don't count the economy out yet with the darkening skies seen in January as world stock markets fell on worries over China and crude oil and world growth," New York-based MUFG Union Bank chief economist Chris Rupkey told Reuters. "Worries don't become reality."

In Europe, the Stoxx 600 Index ended the session with a 0.3% increase from the previous close. France's CAC 40 Index advanced 0.5%, Germany's DAX Index added 0.6%, while the UK's FTSE 100 Index rose 1.3%.

Updated for Wall Street close (10am NZ time)

(BusinessDesk)