By Chris Prentice and Carolyn Cohn
WASHINGTON/LONDON (Reuters) -Wall Street sank and European stocks suffered their worst one-day rout in three weeks on Wednesday on uncertainty over the pace of economic recovery, as the dollar pared gains following dovish remarks from a Federal Reserve official.
Accommodative central bank policies and optimism about reopening economies have pushed equities to record levels but concerns are growing about the impact of rising coronavirus infections due to the Delta variant.
The Dow Jones Industrial Average fell 0.2% to end at 35,029.19 points. The S&P 500 lost 0.13% to 4,514, with materials, energy and technology sectors leading the declines.
The Nasdaq Composite dropped 0.57% to 15,286.68.
Markets are also still assessing data from last week which showed the U.S. economy created the fewest jobs in seven months in August, and wondering how the U.S. central bank will respond.
The New York Fed Bank President on Wednesday said the central bank's decision on tapering is not indicative of timing for lifting rates. Those dovish remarks followed comments from St. Louis Fed Bank President that the tapering plan should move forward despite the slowdown in job growth.
"Everything is tapering, tapering, tapering. We are looking at every single central bank - when is the next one?" said Eddie Cheng, head of international multi-asset portfolio management at Wells Fargo Asset Management, though he added: "The Delta variant impact is still running like a wild card".
The Dow Jones Industrial Average fell 76.74 points, or 0.22 percent, to 35,023.26, the S&P 500 lost 7.8 points, or 0.17 percent, to 4,512.23 and the Nasdaq Composite dropped 87.96 points, or 0.57 percent, to 15,286.37 by 2:17 p.m. EST (1817 GMT).
MSCI's world equity index fell 0.42% after seven consecutive days of gains and European stocks dropped to their lowest in nearly three weeks. Britain's FTSE 100 struck two-week lows.
"September is the month investors confront reality," said Peter Tuz, president of Chase Investment Counsel in Charlottesville, Virginia, pointing to uncertainty over the Fed's tapering plans and inflation fears as a reason investors are taking profits or reallocating funds.
The coronavirus Delta variant and concerns over the economic recovery were also weighing.
A Fed report on Wednesday showed the U.S. economy "downshifted slightly" in August as concerns grew over how the renewed surge of coronavirus cases would affect the economic recovery.
"What is likely ahead of us is a continued but temporary deceleration of economic activity of one to three months which likely started in August," Sebastien Galy, senior macro strategist at Nordea Asset Management, said earlier in the session.