US open: Stocks slide ahead of Federal Reserve's interest rate decision

The Dow Jones Industrial Average dropped 0.20%, the S&P 500 slid 0.19% and the Nasdaq shed 0.86% at 1512 BST.

The Fed is widely expected to keep rates unchanged when it announces its policy measures at 1900 BST amid a slowdown in global economic growth.

Many analysts are pricing in no chance of a rate hike over the next few meetings, and less than one full hike by the end of the year amid worries about the slowdown in the global economy.

The wording of the Fed’s policy statement will be closely scrutinised for clues on the timing of the next rate hike, although Chair Janet Yellen is expected to remain dovish.

“Tonight’s FOMC statement should not provide anything new from a policy standpoint, with markets implying the chances of a rate hike stand at 0% probability, with a cut at 2%,” said Joshua Mahony market analyst at IG.

“The interesting part of today’s meeting will instead be the tone and language with regards to future rate hikes. With markets showing a 21% implied probability of a June hike, the committee will want to align expectations with the likeliness of it happening.”

Ahead of the announcement, official data showed the US trade deficit in goods shrank to $56.9bn in March, a 10.3% improvement on February’s final reading of $63.4bn. The figures from the Commerce Department marked the lowest deficit in more than a year.

US pending home sales increased more than expected in March to reach their highest level in nearly a year, the National Association of Realtors said. The pending home sales index, based on contracts signed last month, climbed 1.4% to 110.5.

Meanwhile, oil prices rallied after data showed a surprise fall in US oil inventories.

The American Petroleum Institute said US crude inventories decreased by 1.1 million barrels last week. The Energy Information Administration will release its official data at 1530 BST with analysts expecting crude stocks to have risen by 1.7 million barrels.

At 1519 BST, West Texas Intermediate crude rose 2.1% to $45.00 per barrel and Brent gained 2.1% to $46.76 per barrel.

In company news, Apple’s shares were in the red after US technology giant reported first-quarter results after Tuesday’s close that revealed the first drop in revenue in 13 years as iPhone sales fell for the first time ever.

“Apple’s had its critics from day-one who said that it was a one-trick pony and that iPhone sales couldn’t rise indefinitely, so after 13 years they’ve got it right. Investors will be looking for evidence that this is just a blip caused by tough yearly comparisons because of the launch of the iPhone 6 and that demand will pick up once the new iPhone 7 is released,” said CMC Markets’ Jasper Lawler.

“Nonetheless, it does appear Apple has reached an inflexion point. Apple now needs a new ground-breaking product, like a car, to justify a higher price multiple.”

Elsewhere on the corporate front, Twitter was also sharply lower after its first-quarter revenue of $595m missed analysts’ expectations, while Chipotle Mexican Grill slumped after reporting its first quarterly loss as a public company.

Boeing climbed after leaving its full year profit and revenue unchanged despite reporting a 9% decline in first quarter profit due to an after-tax charge from the KC-46 aerial refueling tanker it is developing for the US Air Force.