U.S. stocks slide as Fed Reserve rates in focus

Standard & Poor's 500 Index headed for its worst month in more than three years.
Standard & Poor's 500 Index headed for its worst month in more than three years.PHOTO: AFP

NEW YORK (BLOOMBERG, REUTERS) - U.S. stocks opened lower on Monday after weekend comments from Federal Reserve Vice Chairman Stanley Fischer appeared to keep the possibility of a September rate hike alive.

The Dow Jones industrial average fell 94.1 points, or 0.57 per cent, to 16,548.91, the S&P 500 lost 9.69 points, or 0.49 per cent, to 1,979.18 and the Nasdaq composite dropped 28.97 points, or 0.6 per cent, to 4,799.36.

Standard & Poor's 500 Index headed for its worst month in more than three years, as investors grow anxious over the pace of global growth and Federal Reserve officials signaled they're prepared to raise interest rates.

The S&P 500 lost 0.5 per cent to 1,979.38 at 9:32 a.m. in New York, after the gauge rose for a third day on Friday.

"Financial markets are vulnerable," said Stewart Richardson, chief investment officer at RMG Wealth Management in London. "With economic conditions not improving, and in our view probably deteriorating next year, the volatility and stress seen in the last two weeks will happen again, and likely even be worse."

Despite this month's equities rout, remarks by Mr Fischer suggested the central bank hasn't ruled out raising interest rates when the Federal Open Market Committee gathers on Sept. 16-17.

Bets on a September liftoff climbed after Fischer said there is "good reason" to believe inflation will accelerate. Traders are now pricing in a 38 percent chance the central bank will act in September, up from a one-in-four chance last Wednesday.

The Fed has said it will be appropriate to raise rates when it has seen some further improvement in the labor market and is "reasonably confident" inflation will move back to its 2 percent target over the medium term.