Global markets rally on robust economic indicators, bucking central banks' warnings

US Stocks Turn Lower, Dollar Gains as Markets Parse Central Bank Cautions

NEW YORK: US stocks turned lower on Wednesday, as investors digested the latest comments from central banks around the world, which sparked concerns about the pace of global economic growth.

The Dow Jones Industrial Average fell 144.51 points, or 0.5%, to 24,878.13, while the S&P 500 index lost 14.39 points, or 0.5%, to 2,744.13. The Nasdaq composite dropped 61.41 points, or 0.8%, to 7,571.11.

The US dollar strengthened against a basket of currencies, as the yield on the benchmark 10-year Treasury note climbed to its highest level in over a week, amid growing expectations of a rate hike by the Federal Reserve in December.

The dollar's gains were fueled by comments from the European Central Bank, which warned of growing risks to the region's economy, and by the Bank of Japan's decision to keep its monetary policy unchanged.

The cautionary tone from central banks sent stocks lower, as investors reassessed the outlook for global growth and interest rates. The Dow Jones Industrial Average fell as much as 200 points earlier in the session, before paring some of its losses.

"Investors are getting a bit spooked by the central banks' cautionary tone," said Peter Cardillo, chief market economist at Spartan Capital Securities. "It's a reminder that the global economy is still growing at a modest pace, and that interest rates may need to rise to keep inflation in check."

The US Treasury yield curve also steepened, with the yield on the 2-year note rising to its highest level since 2008, as investors priced in a higher likelihood of a rate hike by the Fed in December.

In corporate news, shares of General Electric Co. fell 4.5% after the company reported a decline in quarterly profit, while shares of 3M Co. rose 2.2% after the conglomerate reported stronger-than-expected earnings.