By Stephen Culp
NEW YORK (Reuters) -U.S. stocks closed lower on Wednesday as crude prices tumbled and investors weighed cautious U.S. Federal Reserve commentary and ongoing geopolitical strife against mixed quarterly earnings.
Benchmark U.S. Treasury yields and the dollar eased back from multi-month highs, while gold backed down from its all-time high.
All three major U.S. stock indexes ended the session in the red, with the tech shares dragging the Nasdaq down 1.15%.
"April has been a little disappointing for investors, but remember stocks have gained the past five months, some kind of pause or break would be perfectly normal, and we very well could be seeing that right now," said Ryan Detrick, chief market strategist at Carson Group in Omaha, Nebraska.
U.S. Federal Reserve Chair Jerome Powell declined to provide guidance on Tuesday regarding the timing and extent of expected interest rate cuts, but said policy needs to be restrictive for longer, dimming hopes for rate cuts this year.
"The realization that Powell is pushing back on when the interest rate cuts might start has added to the overall confusion, solidifying the assumption that 'higher for longer' is likely the play," Detrick added.
But Jay Hatfield, CEO and portfolio manager at InfraCap in New York, said investors are now "overly pessimistic" with respect to central bank policy easing, saying that by June the Fed will be ready for a cut.
"Until then, we expect range-bound trading as we're seeing (on Wednesday) where there's a push-pull between interest rates versus a strong economy and strong earnings," Hatfield added.
The first-quarter reporting season gathered steam, with Travelers (NYSE:TRV) Companies missing profit estimates and U.S. Bancorp (NYSE:USB) providing a disappointing interest income forecast.
Tensions in the Middle East remained high as delicate Gaza ceasefire talks continued and the international community awaited Israel's threatened retaliation against Iran for its weekend missile attack.
The Dow Jones Industrial Average fell 45.66 points, or 0.12%, to 37,753.31, the S&P 500 lost 29.2 points, or 0.58%, to 5,022.21 and the Nasdaq Composite dropped 181.88 points, or 1.15%, to 15,683.37.
European shares followed a bruising sell-off with a slight gain, supported by solid earnings from consumer companies, while investors kept a wary eye on developments in the Middle East.
The pan-European STOXX 600 index rose 0.06% and MSCI's gauge of stocks across the globe shed 0.34%.
Emerging market stocks rose 0.36%. MSCI's broadest index of Asia-Pacific shares outside Japan closed 0.38% higher, while Japan's Nikkei lost 1.32%.
U.S. Treasury yields dipped, slowing a sell-off over the past week that pushed benchmark yields to their highest level since November as the Fed reassessed the need for interest rate cuts.
Benchmark 10-year notes last rose 18/32 in price to yield 4.5832%, from 4.657% late on Tuesday.
The 30-year bond last rose 27/32 in price to yield 4.7012%, from 4.757% late on Tuesday.
The dollar fell for the first time in six days against a basket of world currencies, easing back from 5-1/2 month highs as investors processed the notion that the Fed's expected rate cutting cycle is on hold.
The dollar index fell 0.28%, with the euro up 0.5% to $1.067.
The Japanese yen strengthened 0.25% versus the U.S. dollar at 154.35, while Sterling was last trading at $1.2451, up 0.22% on the day.
Oil prices tumbled as high U.S. commercial inventories and expectations of a possible fall in demand as a result of weaker economic data from China offset concerns that ongoing geopolitical turmoil could disrupt supplies.
U.S. crude slid by 3.13% to settle at $82.69 per barrel, while Brent settled at $87.29 per barrel, down 3.03% on the day.
Gold reversed its earlier gain as waning rate cut expectations took some shine out of the safe-haven metal.
Spot gold dropped 0.4% to $2,372.38 an ounce.