In his annual State of the Union speech on Tuesday, Biden urged unity and touted a blue-collar economic resurgence, with proposals including a new minimum tax on billionaires.

Traders also tracked remarks from Powell, who reiterated Tuesday that inflation was coming down -- but conceded interest rates might need to go higher than expected to get it under control.

Wall Street woke up in the red, but European markets were up in afternoon deals, with London's FTSE 100 index hitting a record 7,934.30 points before paring down gains.

Wall Street stocks retreated early Wednesday as markets digested President Biden's State of the Union address and the latest remarks by Federal Reserve Chair Jerome Powell.

Biden stuck heavily to kitchen table issues as he went back and forth with far-right Republicans, who were heckling and mocking throughout his speech. The US president demanded an uneventful accord to raise the debt ceiling and advocated a "billionaire's" tax.

Earlier, Powell had described the mission of bringing down inflation as a long, gradual and "bumpy" process in remarks that analysts described as not overly hawkish.

About 20 minutes into trading, the Dow Jones Industrial Average was down 0.1 percent at 34,109.84.

The broad-based S&P 500 declined 0.4 percent to 4,146.76, while the tech-rich Nasdaq Composite Index dropped 0.7 percent to 12,035.20.

Among individual companies, Uber Technologies jumped 3.2 percent after reporting better than expected profits on strong demand for its ride-hailing services.

But Chipotle Mexican Grill slid 4.2 percent after reporting results that missed analyst estimates. The company pointed to a "challenging and fluid macro environment" as a drag.

Oak Street Health jumped 3.9 percent after it agreed to be bought by pharmacy chain CVS Health for $10.6 billion. CVS rose 4.2 percent.

In the eurozone, Frankfurt and Paris indices jumped on news of spectacular annual profits at French energy major TotalEnergies and Norwegian peer Equinor, mirroring UK rivals BP and Shell.

The sector has reaped gigantic earnings as a result of soaring oil and gas prices following key energy producer Russia's war on Ukraine.

Oil prices rose on Wednesday on fresh bets of rebounding Chinese demand as the superpower emerges from almost three years of tough zero-Covid restrictions.

Biden said the massive oil profits were "outrageous" as he called for the tax on corporate stock buybacks to be quadrupled.

AJ Bell investment director Russ Mould said Powell "had just the soothing message the market was looking for".

A run of key US data in recent months has indicated a series of bumper hikes last year was beginning to pay off, fuelling hopes that the Fed could pause its tightening cycle and even lower borrowing costs at the end of the year.

But a forecast-busting jobs report on Friday -- showing half a million new jobs created in January -- stoked speculation that more increases were on the way.

"Concerns that last Friday's bumper jobs report would see the Fed react to what it perceived as an overheating labour market were eased, with Powell's relatively relaxed response possibly reflecting the seasonal anomalies which often affect the January numbers," added Mould.

"Whether Powell will remain so relaxed if the next set of payroll figures are similarly elevated is open to question," he said.

Powell's remarks were also similar to what he said last Wednesday, after the bank's latest policy meeting, which sparked an equities rally.

Fawad Razaqzada, analyst at City Index and Forex.com, said Powell's speech was "deemed neutral overall".

"Powell acknowledged that the disinflationary process is underway, but also suggested that interest rates may have to be pushed even higher if jobs data continues to show upside surprises," Razaqzada said.