By Stephanie Kelly
NEW YORK (Reuters) - U.S. and European stock markets were knocked lower on Wednesday by corporate earnings concerns, while U.S. bond yields rose on a combination of robust economic data and swirling speculation over who will next lead the Federal Reserve.
The Dow Jones Industrial Average and the S&P 500 suffered their worst day in seven weeks. The Dow <.DJI> fell 112.3 points, or 0.48 percent, to close at 23,329.46, the S&P 500 <.SPX> lost 11.98 points, or 0.47 percent, to 2,557.15 and the Nasdaq Composite <.IXIC> dropped 34.54 points, or 0.52 percent, to 6,563.89.
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Disappointing earnings from AT&T <T.N> sent shares in the United States' second largest wireless carrier down 3.9 percent, pulling down other telecom stocks Verizon <VZ.N> and CenturyLink <CTL.N>.
European shares closed lower, with a mixed batch of company results sparking profit-taking, a day before the European Central Bank is expected to signal a reduction in its bond-buying scheme, gradually withdrawing post-crisis stimulus.
The pan-European STOXX 600 <.STOXX> closed at its lowest level in nearly four weeks, down 0.6 percent. The FTSEurofirst 300 index <.FTEU3> lost 0.61 percent.
MSCI's broadest index of Asia-Pacific shares outside Japan <.MIAPJ0000PUS> closed 0.02 percent higher, while Japan's Nikkei <.N225> lost 0.45 percent.
MSCI's gauge of stocks across the globe <.MIWD00000PUS> shed 0.34 percent.
"The biggest driver today is profit-taking," said Sameer Samana, a global quantitative and technical strategist at Wells Fargo Investment Institute in St. Louis, Missouri.
"We've had a really good year and a really good few months. For a lot of investors, as we get closer to the end of the year, taking some chips off the table is not a bad idea," Samana said.
He added uncertainty around U.S. tax reform and global events such as Catalonia's independence bid are unsettling for investors.
U.S. Treasury yields climbed to months-high peaks, boosted by strong U.S. durable goods and new home sales data.
Benchmark 10-year note <US10YT=RR> yields hit seven-month highs, with the price last down 8/32 in price to yield 2.4353 percent, from 2.406 percent late on Tuesday.
The 30-year bond yield rose to five-month peaks, <US30YT=RR> last losing 13/32 in price to yield 2.9437 percent, from 2.923 percent late on Tuesday.
Yields extended gains after data showing new orders for key U.S.-made non-defense capital goods rose 1.3 percent last month. Other data on Wednesday showed new single-family home sales surging nearly 19 percent to a near 10-year high last month.
Yields also rose amid speculation about President Donald Trump's likely nominee to head the Fed. The impending decision has kept investors on edge over the direction monetary policy might take depending on whom he nominates.
The unanswered Fed leadership question also contributed to a weaker U.S. dollar.
The dollar index <.DXY> fell 0.11 percent, with the euro <EUR=> up 0.44 percent to $1.1811.
The Japanese yen strengthened 0.11 percent to 113.79 per dollar <JPY=>, while sterling <GBP=> last traded at $1.3257, up 0.94 percent on the day.
U.S. crude <CLcv1> fell 0.51 percent to $52.20 per barrel and Brent <LCOcv1> was last at $58.44, up 0.19 percent.
Spot gold <XAU=> added 0.1 percent to $1,277.41 an ounce.
(Reporting by Stephanie Kelly; Additional reporting by Gertrude Chavez-Dreyfuss and Richard Leong in New York, Sruthi Shankar in Bengaluru, Danilo Masoni in Milan and Helen Reid in London; Editing by Daniel Bases and James Dalgleish)