Stocks on world markets and the dollar gained on Tuesday as expectations remained intact that the Federal Reserve will maintain its stimulus program to bolster the nascent United States economic recovery.
Reuters reports that a minor lull in the week's busy schedule of central bank meetings and US data initially offered a break from recent sharp moves.
But as European markets wound down, the dollar surrendered some gains against major currencies and US stock indices moved sharply lower.
Investors were already holding off making big bets until Friday's US non-farm payrolls report shows the employment situation, the key factor for the Fed's decision on monetary policy.
Without a major data driver other than Monday's US factory activity, there was even less incentive to trade.
Some analysts were pointing to technical factors to say the US stock market, with the S&P 500 up more than 15 per cent so far this year, was not as strong as it looks even before it began to swoon.
"With no real catalysts to push us in one direction or another but with plenty of catalysts on the horizon I am not surprised to see markets trending sideways," the managing director, Lazard Capital Markets in New York, Mr. Art Hogan, said.
The Dow Jones industrial average was down by 108.36 points, or 0.71 per cent, at 15,145.67. The Standard & Poor's 500 Index fell by11.48 points, or 0.70 per cent, at 1,628.94.
