Oil prices fell Wednesday on worries over weakening demand in the slowing global economy as Federal Reserve Chief Jerome Powell acknowledged interest rate hikes could lead to a recession.
US stocks had a choppy session, pushing into positive territory for a time after Powell reiterated the need to counter soaring inflation, but cautioned that a recession was "certainly a possibility" amid the ongoing interest rate hikes.
But New York shares retreated again at the end of the day, though they ended with smaller losses than major European and Asian bourses.
The S&P 500 finished just 0.1 per cent lower, meaning it maintained most of the gains from Tuesday's heady session.
"The stock market had ample reasons to sell aggressively into yesterday's strength, but it didn't," Briefing.com said. "That resilience fostered a sense that the existing growth concerns have been adequately priced into the market for now."
In his opening remarks, Powell insisted the US economy "is very strong and well positioned to handle tighter monetary policy."
"Inflation has obviously surprised to the upside over the past year, and further surprises could be in store," the Fed chief said in his semi-annual appearance before Congress.
Policymakers "will need to be nimble" given that the economy "often evolves in unexpected ways," he said.
Oil prices were feeling the heat from recessionary fears, with both main contracts tanking more than six per cent at one point.
"Concerns about a global slowdown appear to be outweighing any concern over supply issues derived from Russia's invasion of Ukraine, and the prospect that Chinese demand could return," said market analyst Michael Hewson at CMC Markets.
US President Biden asked Congress to suspend the federal gas tax for three months as price increases at the pump -- in large part spurred by fallout from President Vladimir Putin's invasion of Ukraine and subsequent Western sanctions on Russia -- have fueled rising inflation.
In a televised address, Biden called for a pause in the federal tax on gasoline of 18 cents a gallon until September. He also asked state governments to suspend their own taxes for the same period.
But the proposal got a lukewarm reception on Capitol Hill, where critics said the measure would hit key highway trust funds and said that it might not lead to much relief at the pump.
US gasoline prices are still very high, but a bit off their record, with the national average easing to $4.955 a gallon, according to the American Automobile Association, about six cents below the level a week ago and below the record of $5.016 hit June 14.
