Following their recent run of gains, US markets backtracked overnight amid confusion over January’s Fed meeting minutes.
Wall Street didn’t get off to a good start after data showed a bigger-than-expected slide in US housing starts last month.
Investors then turned their attention to the Fed and were disappointed by Atlanta Fed President Dennis Lockhart, who said he expected a mid-2015 interest rate hike.
His comments were followed by the Fed minutes for January, which signalled disagreement among officials on whether a rate hike should occur as soon as this year or be left until 2015.
The Dow dropped 89 points (-0.6%) to 16041, the Nasdaq shed 35 points (-0.8%) to 4238 and the S&P500 shed 12 points (-0.6%) to 1829.
In commodity markets, gold eased slightly as the Fed minutes muddied the outlook for US interest rates whilst reiterating the desire among officials to continue stimulus tapering.
The Fed minutes also lent support to the US dollar, which rose against other major currencies.
Forecasts for more cold weather in the US boosted speculation of higher energy demand and fuelled another one percent gain in oil.
There is no major local economic data due for release today, but the key regional focus will be on the latest Chinese HSBC Flash PMI, due out at 12:45pm, AEDT.