Wall Street falls as Fed fuels global growth concerns

US stocks opened sharply lower on Friday after the Federal Reserve's decision to hold interest rates exacerbated worries about the health of the global economy.

The three major indexes were down more than 1% in early trading.

Apart from the state of the world economy, the Fed cited financial market volatility and sluggish inflation at home in its decision to leave rates unchanged, but left the door open for a modest policy tightening later this year.

"Investors are wrestling with how concerned they should be regarding global growth," said Jeremy Zirin, chief equity strategist at UBS Wealth Management.

"The Fed has introduced a quasi third mandate about the global growth, apart from the labor market and inflation."

An economic environment in which the Fed feels it cannot end the era of near-zero interest rates is not one likely to foster the kind of earnings growth needed to support stocks at their current, above-average valuations.

The S&P 500 is trading near 15.6 times forward 12-month earnings, above the 10-year median of 14.7 times, according to Thomson Reuters StarMine data.

At 9:44 a.m. ET (1344 GMT), the Dow Jones industrial average was down 231.5 points, or 1.39%, at 16,443.24, the S&P 500 was down 22.37 points, or 1.12%, at 1,967.83 and the Nasdaq composite was down 46.16 points, or 0.94%, at 4,847.79.

All 10 major S&P sectors were lower with the energy index's 1.86% fall leading the decliners as oil prices declined after the Fed's comments.

The financial index fell 1.71%. Shares of Citigroup, Bank of America, Wells Fargo and JPMorgan were down about 2%.

Investors are now focusing on the Fed meeting on Oct. 27-28 as the next chance for the central bank to raise interest for the first time since 2006.

However, a growing number of economists, including those at Morgan Stanley and Barclays, are now wondering whether the Fed will raise rates at all this year.

Interest rate futures indicated only a 21% chance of a hike at the Fed's next meeting, with a 47% chance in December.

Wall Street closed lower on Thursday, with bank stocks leading the decline following the Fed's announcement. Banks benefit from higher interest rates.

Apple was down 1% at $112.73, while Netflix fell 2.7% to $101.63.

Declining issues outnumbered advancing ones on the NYSE by 2,265 to 471. On the Nasdaq, 1,912 issues fell and 541 advanced.

The S&P 500 index showed no new 52-week highs and eight new lows, while the Nasdaq recorded three new highs and 21 new lows.