Stocks pared their losses on Tuesday, ending the day in the red but well off their earlier lows.
The Dow Jones industrial average closed at 11,855.42, down 137.74 points or 1.2 per cent. The broader S&P 500 closed at 1281.87, down 14.52 points or 1.1 per cent. In Canada, the S&P/TSX composite index closed at 13,546.96, down 72.23 points or 0.5 per cent.
The day began with a definite thud, with North American indexes following the overseas trend, where major indexes sustained deep losses.
In Japan, the Nikkei 225 fell 10.6 per cent, marking its worst one-day decline since 1987, amid ongoing concerns about the country's ability to find its footing following the devastating earthquake and tsunami, which has triggered a nuclear crisis on top of everything else. In Europe, the U.K.'s FTSE 100 fell more than 2 per cent and Germany's DAX index fell more than 3 per cent.
However, North American indexes made impressive rebounds from their lows. At one point in morning trading, the S&P/TSX composite index had been down more than 300 points, putting it on track to mark its worst one-day performance since the financial crisis. Similarly, the Dow rebounded about 160 points from its low.
The monetary policy statement appeared to help sentiment, at least in mid-afternoon trading. The Fed acknowledged improvements in the U.S. labor market, and downplayed threats to inflation caused by rising commodity prices.
Still, the stock market losses were widespread even after the rebounds. Among the 30 stocks within the Dow, only Chevron Corp. showed a gain, of just 0.4 per cent.
Meanwhile, General Electric Co. fell 1.6 per cent, Bank of America Corp. fell 1.9 per cent and Intel Corp. fell 3.2 per cent. Defensive stocks were also hit: Coca-Cola Co. fell 1.4 per cent and McDonald's Corp. fell 0.7 per cent.
Gold, seen by some investors as a safe haven investment, was hit harder than stocks: It fell to $1392.80 (U.S.) an ounce, down $32.10. Crude oil also fell, to $98.70 a barrel, down $2.49.
Commodity producers were mixed. Among energy stocks, Suncor Energy Inc. fell 0.5 per cent but Canadian Natural Resources Ltd. rose 2.1 per cent. Barrick Gold Corp. fell 2.4 per cent but Potash Corp. of Saskatchewan Inc. shook off an earlier dip and closed 2.7 per cent higher. Teck Resources Ltd. also rebounded, ending the day up 4.3 per cent.