U.S. stocks slipped Wednesday, as declines in shares of grocery chains helped drag down the consumer staples sector.

The Dow Jones Industrial Average fell 48 points, or 0.3%, to 18490. The S&P 500 lost 0.3% and the Nasdaq Composite slipped 0.2%.

Consumer staples in the S&P 500 fell 1%. Whole Foods lost 5.4% and Kroger slipped 4.4% after Sprouts Farmers Market cut earnings expectations, raising concerns about the impact of falling food prices on the chains' earnings. Sprouts shares fell 13%.

Recent lackluster economic data has investors betting the Federal Reserve is unlikely to nudge up interest rates in September. The Institute for Supply Management's nonmanufacturing index fell to its lowest level in 6½ years, according to figures released Tuesday, and recent employment figures disappointed.

"In order for the market to move to discernible new highs we need to see growth," said Eric Wiegand, senior portfolio manager at U.S. Bank's Private Client Reserve.

The yield on the benchmark 10-year Treasury note fell to 1.541% Wednesday, according to Tradeweb. The yield was 1.544% Tuesday. Yields fall as prices rise.

Energy shares in the S&P 500 rose 0.1%, led by a 6.9% advance from Apache, which said it has discovered what may become one of the biggest energy finds of the past decade in west Texas.

Shares of Chipotle Mexican Grill gained 4.8% after activist investor William Ackman's Pershing Square Capital Management disclosed a 9.9% stake in the burrito chain, making it the second-biggest holder of Chipotle stock.

The moves came one day ahead of European Central Bank's policy meeting. Officials are set to release a new raft of economic forecasts, which will provide markets with further clues on how much stimulus the ECB is likely to deliver in the future.

"There's every indication they should ease further, but no indication they will at this point," said Megan Greene, chief economist at Manulife Asset Management.

Some analysts believe policy makers could address concerns that the ECB's bond-buying program is set to run out of assets to buy because of the central bank's self-imposed rules. This could include dropping some of the rules or announcing an extension of the program beyond its current end-date of March 2017, which would give further reason for investors to keep buying sovereign bonds.

Other analysts argue it is too soon for the ECB to radically revise either its projections or its policies.

The Stoxx Europe 600 index rose 0.3%. Oil and gas companies were among the biggest gainers, boosted by rising crude prices. U.S. oil rose 1.3% to $45.42 a barrel.

Asian stocks closed weaker, led by a 0.4% fall in the Nikkei Stock Average as the dollar lost 0.2% against the yen. A stronger currency is a hurdle for Japan's export-dependent multinationals.

Sonja Laud, fund manager at Baring Asset Management, said are set to keep flowing out of advanced countries.

"[Emerging-market] local bonds and in some cases equities is definitely something we've been moving into. Another area is high yield," she said.

The MSCI Emerging Markets equity index rose 2.6% in dollar terms Tuesday, the biggest jump since March.

Policy is now a major driver of markets ahead of a politically charged calendar, including the U.S. elections in November and a referendum on constitutional reform in Italy, probably during the same month.

While central banks' easy-money policies are supporting the rally in bonds and emerging-market assets, many investors see policy makers shifting toward new fiscal reforms. Depending on its success in boosting economic growth in developed nations, it could cap the gains in bonds and emerging markets.

"This is a radical departure from the austerity dominance we've seen since 2008 and this departure will put a floor under interest rates," said Marie-Owens Thomsen, chief economist at Indosuez Wealth Management.

Write to Aaron Kuriloff at aaron.kuriloff@wsj.com and Jon Sindreu at jon.sindreu@wsj.com

 

(END) Dow Jones Newswires

September 07, 2016 14:27 ET (18:27 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.
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