1st LD Writethru: U.S. stocks retreat ahead of Fed meeting

U.S. stocks reversed early gains to end sharply lower Wednesday, as investors kept cautious ahead of the Federal Reserve's policy meeting next week.

The Dow Jones Industrial Average dipped 239.11 points, or 1.45 percent, to 16,253.57. The S&P 500 lost 27.37 points, or 1.39 percent, to 1,942.04. The Nasdaq Composite Index was down 55.40 points, or 1.15 percent, to 4,756.53.

Wall Street remains focused on the Fed ahead of its key policy meeting next week, when the U.S. central bank could raise interest rates for the first time in more than nine years.

The U.S. Labor Department showed Wednesday that the number of job openings again rose to a series high of 5.8 million on the last business day of July.

Some analysts thought that possibility for the Fed to raise interest rates this month becomes higher as the U.S. job market continued steady growth momentum.

"The Fed expects the job market will tighten as long as it waits to raise rates. Hence, the FOMC (Federal Open Market Committee) must weigh the risks to markets from a gradual tightening starting now or a faster tightening if they delay," chief economist at FTN Financial Chris Low said in a note.

Meanwhile, the diving oil prices, which dragged the energy sector down 1.94 percent as the biggest laggard among the S&P 500's ten sectors, also weighed on market sentiment.

Overseas stock markets, however, increased broadly Wednesday.

In Asia, Japanese equities soared 7.71 percent with its benchmark Nikkei stock index notching its biggest percentage gain since October 2008, as steep gains in global stock markets overnight triggered a rebound from recent losses.

Chinese shares gained for the second straight day Wednesday following the government's new fiscal stimulus measures, with the benchmark Shanghai Composite Index rising 2.29 percent.

European shares also finished higher on Asia stimulus hopes Wednesday, with French benchmark index CAC 40 going up 1.44 percent. Endit