Following the notable upward move seen in the previous session, stocks gave back some ground during the trading day on Wednesday. Selling pressure was relatively subdued, however, limiting the downside for the major averages.
The major averages ended the session off their worst levels of the day but still firmly in the red. The Dow slid 100.72 points or 0.4 percent to 25,776.61, the Nasdaq fell 34.88 points or 0.5 percent to 7,750.84 and the S&P 500 dipped 8.09 points or 0.3 percent to 2,856.27.
The moderate weakness on Wall Street came as traders continued to worry the trade dispute between the U.S. and China is escalating into a full-fledged trade war.
A report from the South China Morning Post said Chinas is re-examining the entire bilateral economic relationship between the U.S. and China.
The SCMP said Chinese government advisers are highlighting the risk of sourcing critical supplies from an increasingly hostile U.S. following the Trump administration's recent move to blacklist Chinese tech giant Huawei.
Mei Xinyu, a fellow at the research institute under China's Ministry of Commerce, told the SCMP that Beijing should prepare for the worst-case scenario to defend its rights in climbing up the global value chain through technological catch-up.
"Even if a deal is reached, it could be torn apart [by President Donald Trump] easily at any time," Mei said, comparing the current trade talk deadlock to the Panmunjom peace talks during the Korean War.
Adding to the trade concerns, Treasury Secretary Steven Mnuchin told CNBC's Ylan Mui the U.S. has no plans to go to Beijing to resume trade negotiations.
Stocks remained mostly lower following the release of the minutes of the latest Federal Reserve meeting, which suggested the central bank is in no rush to alter the path of interest rates.
The minutes showed members agreed that a patient approach to determining future adjustments to rates would likely remain appropriate for "some time."
Citing an environment of moderate U.S. economic growth and muted inflation pressures, the Fed expects to remain patient even if global economic and financial conditions continued to improve.
The Fed decided to leave interest rates unchanged at the two-day meeting ended May 1st, as uncertainties affecting the U.S. and global economic outlooks had receded but inflation pressures remained muted.
Sector News
Oil service stocks showed a substantial move to the downside on the day, dragging the Philadelphia Oil Service Index down by 3.3 percent.
The sell-off by oil service stocks came as the price of crude oil for July delivery plunged $1.72 to $61.42 a barrel following the release of a report showing an unexpected weekly increase in crude oil inventories.
Considerable weakness was also visible among semiconductor stocks, as reflected by the 2.1 percent slump by the Philadelphia Semiconductor Index.
Qualcomm (QCOM) posted a steep loss after a federal judge ruled the communications chip maker violated antitrust law.
Natural gas, transportation, and steel stocks also saw notable weakness on the day, while strength emerged among pharmaceutical and utilities stocks.
Other Markets
In overseas trading, stock markets across the Asia-Pacific region closed mixed for the fifth consecutive session on Wednesday. Japan's Nikkei 225 Index inched up by 0.1 percent, while China's Shanghai Composite Index fell by 0.5 percent.
The major European markets also finished the day mixed. While the French CAC 40 Index edged down by 0.1 percent, the U.K.'s FTSE 100 Index crept up by 0.1 percent and the German DAX Index rose by 0.2 percent.
In the bond market, treasuries rebounded after edging lower over the two previous sessions. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 3.3 basis points at 2.393 percent.
Looking Ahead
Traders will be on the lookout for any trade-related news on Thursday but are also likely to keep an eye on reports on weekly jobless claims and new home sales.
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