NEW YORK (AFP) - Wall Street stocks finished lower on Tuesday (Jan 25) following another volatile session as markets nervously eyed the impasse over Ukraine while awaiting a key Federal Reserve decision.

The United States warned Moscow of damaging sanctions, including high-tech export curbs, as Russian combat troops near Ukraine launched new exercises.

Meanwhile, Fed officials kicked off a two-day policy meeting that is expected to yield clues on how Fed chairman Jerome Powell's recent focus on countering inflation will affect monetary policy.

Markets briefly rallied in the afternoon, but were unable to match Monday's pattern when major indices staged a huge comeback amid bargain hunting.

The Dow Jones Industrial Average ended down 0.2 per cent at 34,297.73.

The broad-based S&P 500 shed 1.2 per cent to 4,356.45, while the tech-rich Nasdaq Composite Index tumbled 2.3 per cent to 13,539.29.

The International Monetary Fund trimmed its world GDP forecast for 2022 to 4.4 per cent, half a point lower than the October estimate as the Omicron variant of Covid-19 weighs on activity.

Analysts also cited a Commerce Department report that said US firms have an average of less than five days worth of semiconductors on hand.

Among individual companies, Dow members IBM, American Express and Johnson & Johnson all rallied following solid earnings reports.

But Aerojet Rocketdyne plunged 18.4 per cent after the Federal Trade Commission announced it was suing to block Lockheed Martin's US$4.4 billion (S$5.9 billion) takeover of the company. Lockheed Martin jumped 3.7 per cent.