Wall Street's record rally petered out on Wednesday and stocks elsewhere slid as the US ban of China Telecom and Germany's growth downgrade weighed on sentiment.

The Dow and S&P 500 edged up at the opening bell from their record closes, but then fell back to end less than one percent lower.

"The restraint is owed partly to a belief that the stock market seems ripe for a consolidation period after a huge move this month," said Briefing.com analyst Patrick J O'Hare.

Wall Street, and global markets generally, have rebounded from drops in September when investors took fright at surging inflation and the prospect of tighter monetary policy.

A strong corporate earnings season has provided some much-needed support to investors in recent weeks as companies showed resilience in the face of supply snarls, surging commodity and wage costs, as well as spiking Covid-19 cases.

But long-running friction between Washington and Beijing continues to cast a dark shadow over trading floors, with the two powers locked in a standoff over a range of issues including Taiwan, national security, technology, trade and Hong Kong.

Meanwhile, there was no indication an agreement had been finalized in the US Congress on a potentially $2 trillion social spending plan.

The proposed legislation has divided investors between those who believe it will fuel inflation, and others who see it as sparking economic growth.

Focus also was on the tech sector after the US Federal Communications Commission on Tuesday canceled the operating license of China Telecom's US unit, saying it "raised significant national security and law enforcement risks."

The move came after a clampdown by former US president Donald Trump on other telecom giants including Huawei and China Mobile.

The latest step "seems to dampen previous hopes that the US-China relations may be turning for the better," said Jun Rong Yeap of IG Asia.

Most of Asia was in the red as a forecast-beating jump in Australian core inflation added to broad fears about soaring global prices.

Investors also are keeping tabs on the crisis in China's property sector with several developers struggling to meet their debt obligations, while industry giant Evergrande faces a new deadline at the end of the week to avoid a default.

In Europe, the German government downgraded its growth forecast to 2.6 percent for this year, largely owing to bottlenecks in global supply chains, which dampened sentiment.

The British government upgraded its 2021 growth forecast to 6.5 percent as it unveiled a budget, but that failed to help London stocks, with the FTSE 100 closing slightly lower.

Oil markets slid Wednesday as data showed a big gain in US inventories of crude and petrol.

Crude prices have been striking multi-year highs on expectations of surging demand and concerns over supplies.

Hong Kong stocks led Asian markets lower after the United States revoked China Telecom's licence Hong Kong stocks led Asian markets lower after the United States revoked China Telecom's licence Photo: AFP / Peter PARKS

All eyes will be on the European Central Bank Thursday when it updates its monetary policy amid expectations that major central banks will begin winding down their pandemic stimulus as economies recover.

The US government will report third-quarter growth data, which will indicate the damage done by the Delta wave of Covid-19.

New York - Dow: DOWN 0.7 percent at 35,490.69 (close)

New York - S&P 500: DOWN 0.5 percent at 4,551.68 (close)

New York - Nasdaq: FLAT at 15,235.83 (close)

EURO STOXX 50: DOWN 0.1 percent at 4,220.88 (close)

London - FTSE 100: DOWN 0.3 percent at 7,253.27 (close)

Frankfurt - DAX: DOWN 0.3 percent at 15,705.81 (close)

Paris - CAC 40: DOWN 0.2 percent at 6,753.52 (close)

Tokyo - Nikkei 225: FLAT at 29,098.24 (close)

Hong Kong - Hang Seng Index: DOWN 1.6 percent at 25,628.74 (close)

Shanghai - Composite: DOWN 1.0 percent at 3,562.31 (close)

Euro/dollar: DOWN at $1.1602 from $1.1604 at 2040 GMT

Pound/dollar: DOWN at $1.3738 from $1.3767

Euro/pound: UP at 84.44 pence from 84.26 pence

Dollar/yen: DOWN at 113.82 from 114.14 yen

Brent North Sea crude: DOWN 2.6 percent at $84.10 per barrel

West Texas Intermediate: DOWN 3.0 percent at $82.10 per barrel