US Stocks Drop as Oil Falls with Fed Rate Hike Doubts Rising

Wall Street opened lower on Monday as oil prices dropped the most in four weeks and investors weighed the prospects of an interest rate hike in the coming months.

Oil prices fell nearly 3 percent as China ramped up exports of refined products, U.S. producers added rigs for an eighth consecutive week, and prospects emerged for increased exports from Iraq and Nigeria. [O/R]

With the earnings season coming to an end, investor focus will shift to Federal Reserve Chair Janet Yellen’s speech on Friday at the annual central bankers’ meeting in Jackson Hole, Wyoming.

“The markets will start to get a little bit nervous about what’s going to be said, what kind of indications will be given about a September hike,” said Robert Pavlik, chief market strategist at Boston Private Wealth in New York.

The case for an imminent rate hike was strengthened by Fed Vice Chairman Stanley Fischer’s comments that the U.S. economy was close to hitting job and inflation targets.

New York Fed president and permanent voting member William Dudley said last week that a hike as soon as next month was possible.

via Reuters

Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, he established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza