U.S. stocks lower while digesting Fed comments, oil slumps 3%

Stock market

Market participants opted to sell U.S. equities on Monday despite the lack of news flow as traders continued to digest comments from Federal Reserve (Fed) officials and started the countdown to the U.S. central bank head Janet Yellen’s speech on Friday, while oil slumped 3%, ending a seven-day rally.

At 15:34GMT, or 11:34AM ET, the Dow 30 lost 52 points, or 0.28%, the S&P 500 fell 6 points, or 0.27%, while the tech-heavy Nasdaq Composite traded down 10 points, or 0.20%.

Fed vice chair Stanley Fischer said on Sunday that the U.S. economy was close to hitting the central bank's targets for full employment and 2% inflation.

Fischer's speech was just the latest piece of hawkish rhetoric from top Fed officials. Last week, San Francisco Fed president John Williams, New York Fed chief William Dudley and Atlanta Fed president Dennis Lockhart all said a September rate hike may be on the table.

Yellen will give a speech at the end of the week at the Economic Symposium at Jackson Hole and investors will look for clues on the future path of monetary policy.

However, according to Investing.com's Fed Rate Monitor Tool, investors are pricing in just a 15% chance of a rate hike by September, up from just 6% at the start of last week.

Still, the probability of an increase at the December meeting once again surpassed the 50% threshold on Monday.

With no major macro data set for release on Monday, Fischer’s remarks were helping support the dollar against major rivals, while causing gold to slump to a two-week low.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, edged forward 0.05% at 94.53, at 15:36GMT or 11:36ET, while gold for December delivery on the Comex division of the New York Mercantile Exchange dropped 0.27%, or $3.65, to $1,342.55.

Meanwhile, oil snapped a seven-session win streak on Monday as reports surfaced that Iraq would increase crude exports by 5%, further undermining recent speculation that OPEC could take measures to control output when it meets on the sidelines of the International Energy Forum in September.

Additionally, indications of an ongoing recovery in U.S. drilling activity also kept prices under pressure. According to oilfield services provider Baker Hughes, the number of rigs drilling for oil in the U.S. last week increased by 10 to 406, the eighth consecutive weekly rise and the 11th increase in 12 weeks.

U.S. crude futures slumped 2.99% to $47.64 by 15:38GMT, or 11:38AM ET, while Brent oil traded down 2.91% to $49.40.

In company news, Medivation Inc (NASDAQ:MDVN) jumped almost 20% after Pfizer Inc (NYSE:PFE) confirmed a deal to acquire the U.S. cancer drug company for close to $14 billion.

Intersil Corporation (NASDAQ:ISIL) was also up almost 19% on a report that Japan’s Renesas Electronics was close to deal to buy the U.S. chipmaker for $3 billion.

Source by Investing.com