U.S. stocks closed lower on Wednesday after an earlier than expected release of the Federal Reserve's minutes, global growth concerns and a plunge in oil prices sent them for a wild ride. (Tweet This)
The Dow Jones industrial average opened Wednesday trading by shedding over 150 points before falling over 225 points in late-morning trading, while the S&P 500 fell over 1 percent and the Nasdaq Composite traded below the 5,000 mark.
Nevertheless, the Dow Jones and the Nasdaq briefly turned positive while the S&P 500 pared most of its earlier losses after the Fed's minutes release before going back down.
US stock indexes on the day
Dow Jones industrial average
"People shouldn't read too much into these intraday movements until we break out of this range," said Zacharay Karabell, head of global strategy at Envestnet. "We're in an August market with low volume that's kind of 'meh.'"
The minutes indicated that conditions for the first rates increase in about a decade had not been met, due primarily to inflation that is not yet moving toward the necessary conditions.
"Most judged that the conditions for policy firming had not yet been achieved, but they noted that conditions were approaching that point. Participants observed that the labor market had improved notably since early this year, but many saw scope for some further improvement," the minutes said.
"The market is definitely treating this as a sign that the Fed is not likely to raise rates in September," said Michael Arone, chief investment strategist at State Street Global Advisors, adding that there's still a chance that a hike could come in December of this year.
"I think today really shows us that data dependence is not a monetary policy. My sense is that this is a committee that wants to hike; if anything it seems like the odds of September have gone up," Richard Clarida, global strategic advisor at Pimco, said on CNBC's "Power Lunch."
"This really reinforces the idea that the status quo is not good enough, that the Fed will remain on the sideline waiting for further improvement. This reinforces our long-held forecast that the Fed will wait beyond that September meeting, beyond that December meeting and really make a liftoff a 2016 event," Lindsey Piegza, chief economist Stifel Nicolaus & Co., said after the release.
A wild trading session in China that sent other Asian markets down also weighed on equities.
"It's the recurring worries about what's going on overseas," said Scott Brown, chief economist at Raymond James. "Domestically, I think we're in pretty good shape.
"You're seeing a spillover from overseas markets into our markets," said Mark Luschini, chief investment strategist at Janney Montgomery Scott.
China's Shanghai Composite closed 1.24 percent higher overnight after falling over 4 percent at its session lows. This wide trading range sent Japan's Nikkei 225 down 1.61 percent and the Hang Seng index down 1.31 percent as concerns over China's economic stability grew once more.
Meanwhile, European equities ended lower as Germany's lawmakers approved Greece's latest bailout program, all while investors waited the latest Fed meeting minutes.
"A Fed rate hike of 0.25 percent wouldn't be a bad thing," said William Lynch, director of investments at Hinsdale Associates. "It would get the uncertainty out of the way."
A Fed rate hike this year would be the first one in about a decade, but Nick Raich, CEO at The Earnings Scout, said the central bank may have a harder time lifting off than it previously thought.
"In the first quarter [of 2015], the Fed itself said the global growth slowdown was due mostly to transitory factors," Raich said. "There is a global growth slowdown and the Fed will have to take that into consideration as it prepares to set monetary policy next month."
"I think the overreaching concern should be 'let's get this over with' so we can stop talking about the Fed," said Art Hogan, chief market strategist at Wunderlich Securities.
This slowdown is shown especially within the commodities complex, particularly in oil, Raich added.
U.S. oil prices settled down 4.3 percent, pushing energy stocks down about 2 percent, after the Energy Information Administration reported an unexpected rise in crude stockpiles.
"I think that's putting pressure on energy stocks. That being said, this is a broad-based selloff," said JJ Kinahan, chief strategist at TD Ameritrade.
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Kinahan added that the combination of the volatility overseas and not knowing what's in the Fed minutes has led to many investors to find safe haven in the VIX, as it's more of an "in-and-out trade" than Treasurys, for example.
The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, traded as high as 15.96, up over 12 percent, before trading at about 14.
Wall Street also weighed the latest reading from the Consumer Price Index, which rose 0.1 percent in July versus the expected 0.2 percent increase, the Labor Department said.
The department added that core CPI also rose 0.1 percent.
"Bottom line, differentiating between commodity deflation and services inflation and we have the tale of two price stories," Peter Boockvar, chief market analyst at The Lindsey Group, said in a note.
"As the Fed tells us that they think the PCE is a better gauge of prices, the 1.8% core CPI y/o/y rate, matching the most in a year, does not match the measure of price stability (aka, 2% core inflation) that they are so focused on achieving. What this figure today tells us about the outcome of the September FOMC meeting is very little only because they have chosen the PCE as their preferred inflation measure."
Investors also took in a slew of news, as Lowe's reported earnings per share that missed expectations, but its revenue and same-store sales came in above forecasts. The company's full-year guidance also came in better than expected.
Staples also reported earnings per share of 12 cent, matching estimates, on revenue that was essentially in line with expectations, while Hormel Foods beat earnings per share estimates, but came in light on revenue.
Furniture make La-Z-Boy posted earnings per share of 27 cent a share, beating expectations, while same-store sales rose 5.3 percent.
Analog Devices reported 77 cents earnings per share for last quarter, beating estimates, while revenue also came in better than expected.
Target also posted better-than-expected earnings, beating earnings per share estimates by 11 cents, sending the stock up over 4 percent before paring its gains.
L Brands, NetApp and Popeyes Louisiana Kitchen are all scheduled to report after the bell.
The S&P 500 closed down 17.29 points, or 0.82 percent, at 2,079.63, as energy led eight sectors lower with utilities and telecommunications advancing.
The Nasdaq fell 40.29 points, or 0.8 percent, to 5,019 as the iShares Nasdaq Biotechnology ETF dropped 0.71 percent.
U.S. 10-year Treasury note yields traded lower at about 2.12 percent.
Gold futures settled up $11 to $1,127.90 an ounce.
Decliners led advancers 3 to 1 at the New York Stock Exchange, with an exchange volume of 833.8 million and a composite volume of 3.476 billion at the close.
On tap this week:
Earnings: Gap, Hewlett-Packard, Salesforce.com, Brocade, Mentor Graphics, Royal Ahold, Buckle, Madison Square Garden, Toro, Intuit
8:30 a.m.: Initial claims
10:00 a.m.: Existing home sales
10:00 a.m.: Philadelphia Fed survey
Earnings: Deere, Foot Locker, Ann
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—CNBC's Peter Schacknow and Reuters contributed to this report.