Oil Drops on Higher Inventories

Oil prices fell on Wednesday after a surprise build in U.S. crude inventories, while the dollar gave up recent gains as investors awaited direction on a potential interest rate hike.

Wall Street weakened in morning trading after oil turned lower, as energy shares dropped, with stocks losing steam after the Nasdaq and S&P 500 again set record highs on Tuesday.

The Dow Jones industrial average .DJI fell 40.95 points, or 0.22 percent, to 18,492.1, the S&P 500 .SPX lost 6.5 points, or 0.3 percent, to 2,175.24 and the Nasdaq Composite .IXIC dropped 26.05 points, or 0.5 percent, to 5,199.43.

“Low volume is fairly standard at this time of the year and August tends to be a very choppy month,” said Quincy Krosby, market strategist at Prudential Financial in Newark, New Jersey. “If you have low volumes, it could skew the market in any direction, and that’s what you have today.”

With bond yields low in developed economies as central banks maintain accommodative monetary policies, investors have sought equities for yield.

MSCI’s all-world index .MIWD00000PUS slipped 0.1 percent after rising to a fresh one-year high. MSCI’s emerging markets index .MSCIEF gained 0.4 percent, up for a fifth straight session and hitting its highest in a year.

via Reuters

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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, Alfonso Esparza 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 has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. 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