The Dow Jones Industrial Average dropped 30.16 points (0.25 per cent) to 12,177.01 around 1445 GMT and the tech-laden Nasdaq lost 7.52 points (0.32 per cent) to 2,318.68.

The broad-market Standard & Poor's (S&P) 500 index fell 1.69 points (0.13 per cent) to 1,328.92.

Trading extended on Friday's Wall Street selloff that had capped a volatile week for global markets amid fears that the world's biggest economy could slip into recession: the Dow dropped 1.38 per cent, the Nasdaq 1.47 per cent and the S&P 500 1.59 per cent.

All eyes were on the Federal Reserve's policy-making meeting on Wednesday to see what further interest rate relief the central bank would offer, if any, to ward off recessionary risks after its surprise three-quarter-point cut last Tuesday.

Most analysts expect the Fed to trim a quarter point off its base federal funds interest rate, currently pegged at 3.50 per cent.

The government's first estimate of gross domestic product (GDP) growth in the 2007 fourth quarter also is due Wednesday.

'There are still great and understandable recession fears, but the economic data have not even come close to deteriorating as they did ahead of the 2001 recession,' said Dick Green at Briefing.com.

'It remains to be seen if the Fed cutting rates significantly ahead of negative real GDP growth will be sufficient to hold off a recession this cycle,' he said. -- AFP