The Dow Jones industrial average fell 62.13 points, or 0.38 per cent, to 16,370.96, the S&P 500 lost 8.02 points, or 0.41 per cent, to 1,953.03 and the Nasdaq Composite dropped 16.58 points, or 0.34 per cent, to 4,805.76.
Stocks are expected to stay volatile ahead of a Federal Reserve announcement scheduled for Thursday after a two-day meeting at which it will decide whether or not to make its first interest rate increase since 2006.
“There’s absolutely no conviction up or down. Everybody’s waiting on the Fed. The Fed’s sitting around singing that tune ‘Should I stay or should I go now. If it stay it will be trouble. If I go it will be double’,” said David Spika, global investment strategist for the GuideStone Funds, in Dallas, Texas citing lyrics from a popular song by The Clash.
The Fed has said it will raise rates when it sees a sustained economic recovery with emphasis on jobs and inflation but while the jobs market has improved inflation has been held down by weak oil prices.
A broad group of economists polled by Reuters last week bet on a September move by a slim margin; economists at banks that deal directly with the Fed, known as primary dealers, picked December as more likely; and traders of short term interest rate futures were giving a rate rise this week only a one-in-four chance.