Prices fell sharply on key Asian markets Tuesday, while European shares swung from steep losses to some modest gains. U.S. stocks opened the day higher after Monday's large losses.
Global stock markets have taken some deep losses in volatile trading since a rating agency cut the U.S. government's credit rating one level last Friday. Concerns about political disputes over spending and the U.S. debt added to worries about the European debt crisis, and fears about the slowing global economy.
With that in mind, many investors are watching closely as top officials of the U.S. central bank gather in Washington to discuss interest rates and other economic policies.
Some economists say the Federal Reserve might try to calm markets by announcing a new effort to stimulate the U.S. economy, which is the world's largest.
While Fed officials have not said what they might do, reports in the financial press speculate they might pledge to hold U.S. interest rates at their current ultra-low level for a long period, or begin another round of bond purchases. Two previous programs of buying up financial assets were intended to bolster the economy by cutting long-term interest rates.
In the meantime, investors continued to buy U.S. Treasury bonds, seeking the safety of government debt at a time of stock market volatility. That effectively lowers the price the government must pay to borrow money.
Gold, a traditional safe investment in troubled times, has hit a series of record high prices. The prices of most other commodities, including oil, fell as investors appeared to expect a slowdown that would cut demand for energy and materials.
U.S. President Barack Obama said he disagrees with the downgrade by the Standard and Poor's rating agency. He says he hopes it will prompt lawmakers in Washington to agree on a plan to manage Washington's debt and deficit that includes higher taxes for the wealthy and cuts in spending on social programs. Republicans immediately rejected any tax increases.
S&P Monday defended its decision, saying increasing debt levels in the United States and the inability of Congress and the president to reach political consensus for significant deficit reductions were "no longer comparable with the most highly rated governments."
The other two major credit rating agencies - Moody's and Fitch - have so far kept the U.S. at the highest rating.