The latest US economic data were disappointing, more than offsetting the decision by Federal Reserve policy makers to stick with their programme of purchasing US$85 billion of bonds a month to bolster growth.
"The Committee is prepared to increase or reduce the pace of its purchases to maintain appropriate policy accommodation as the outlook for the labour market or inflation changes," the Fed said in a statement at the end of a two-day FOMC meeting.
The statement helped Wall Street pare losses momentarily. In afternoon trading in New York, the Dow Jones Industrial Average shed 0.82 per cent, the Standard & Poor's 500 Index fell 0.61 per cent advance, while the Nasdaq Composite Index declined 0.78 per cent.
"The talk of tapering has not only been pushed to the back burner but pushed off the stove altogether. It's not something we're likely to see until 2014," Michael Woolfolk, senior currency strategist at BNY Mellon in New York, told Reuters.
The latest US economic data pointed to weakness in job growth, manufacturing and constructing spending.
Private employers added 119,000 jobs in April, according to ADP. That was well short of economists' expectations for 150,000 and the lowest since September. It also may lead to lower expectations heading into Friday's government payrolls report.
US manufacturing slowed, two separate reports showed today. The Institute for Supply Management's factory index declined to 50.7 in April from 51.3 in March, while Markit's final Manufacturing Purchasing Managers Index fell to 52.1 in April from 54.6 in March.
More disappointing data came in the form of construction spending which dropped 1.7 per cent to an annual rate of US$856.72 billion, the least since August.
The latest data from China also added to a dimming global outlook. The Purchasing Managers' Index came in at 50.6, down from 50.9 in March and below economists' expectations.
Concern that slower economic growth will dampen demand for commodities hit gold, copper and oil prices.
Adding to the weakness in crude prices was Energy Information Administration data showing that US inventories soared to 395.3 million barrels in the seven days to April 26, the highest level since the government began gathering weekly data in 1982.
West Texas Intermediate crude for June delivery was last 3.1 per cent lower at US$90.61 a barrel on the New York Mercantile Exchange, according to Bloomberg.
Shares of Merck fell, last down 2.9 per cent, after the company lowered its full-year earnings outlook.
In Europe, markets were closed for the May 1 holiday.