NEW YORK — Wall Street tumbled Tuesday, following Japan’s stock market sharply lower as the earthquake-shattered country faced an unfolding nuclear crisis.
The Dow Jones industrial average fell as much as 297 points in early trading, but was lately off those lows. The dollar strengthened and government bond prices rose, as investors flocked to the relative safety of U.S. Treasurys. Earlier, Japan’s benchmark Nikkei 225 stock average sank a staggering 10.6 percent — more than 1,000 points — after a radiation leak was detected at a crippled power plant and residents were warned to stay indoors, sending global equities sharply lower in what could be a prolonged bout of turmoil for the world’s financial markets.
Tuesday’s drop marked the worst two-day rout for the Nikkei since 1987. It followed a 6 percent tumble Monday — the first trading day since a devastating earthquake and tsunami struck the northeastern coast, washing away towns and likely killing more than 10,000 people. Losses on Monday and Tuesday have sent the Nikkei spiraling downward 20 percent since the beginning of the year.
Fears of a nuclear catastrophe in Japan drove down U.S. equities. Wall Street was also looking ahead to the U.S. Federal Reserve’s policy meeting later Tuesday, when the central bank is expected to hold monetary policy on a steady course, even as lofty oil prices and increased uncertainty following Japan’s earthquake raises doubts about the global economy’s path.
In a statement due around 2:15 p.m. ET, policymakers are likely to nod to recent improvement in the economy while seeking to avoid any suggestion that they intend to cut short a $600 billion bond-buying program announced in November.
Fed officials will likely do so by beefing up their assessment of economic conditions while emphasizing just how far the central bank remains from its targets for both inflation and employment.
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