Wall Street falls as jittery investors await US Fed Reserve meet

Stocks are expected to remain volatile in the run-up to this week's Federal Reserve meeting that will decide on an interest rate increase.
Stocks are expected to remain volatile in the run-up to this week's Federal Reserve meeting that will decide on an interest rate increase. PHOTO: REUTERS

NEW YORK (REUTERS) - U.S. stocks were lower at the open on Monday as a weary market awaited this week's Federal Reserve meeting that will decide on an interest rate increase.

Stocks are expected to remain volatile in the run-up to the policy meeting on Wednesday and Thursday. "The uncertainty is so high in regard to the announcement ... it leaves investors a little bit paralyzed relative to what to do in anticipation thereof," said Mark Luschini, chief investment strategist at Janney Montgomery Scott in Philadelphia.

A Reuters poll showed that a small majority of forecasters still expect a Fed hike on Thursday, though markets-based models suggest policy tightening will be delayed.

At 9:40 a.m. ET (9.40 pm Singapore time), the Dow Jones industrial average was down 56.39 points, or 0.34 per cent, at 16,376.7, the S&P 500 was down 5.52 points, or 0.28 per cent, at 1,955.53 and the Nasdaq Composite was down 1.91 points, or 0.04 per cent, at 4,820.44.

Nine of the 10 major S&P sectors were lower with the energy index's 1.19 per cent fall leading the decliners.

Oil prices fell more than 1.5 per cent on the prospect of dwindling demand, though reduced U.S. drilling, as measured by a rig count, offered some support. Exxon's 1 per cent fall weighed the most on the Dow and the S&P.

Data on Monday showed that growth in China's investment and factory output missed forecasts in August, raising the chances that China's third-quarter economic growth may dip below 7 per cent for the first time since the global crisis.

Stocks have been volatile for the past few weeks since China devalued its currency in August and the impact of a slowdown in the country on global growth rattled investors. The S&P 500 has had moves of at least 1 percent in more than 10 sessions since Aug. 20.

Wall Street closed higher last week with the S&P 500 and Nasdaq composite posting their biggest weekly gain since July.

The Fed has said it will raise rates when it sees a sustained economic recovery with special emphasis on the job market and inflation.

U.S. data released last week has painted a mixed picture, further clouding the outlook for what the Fed will decide to do this week.

Apple shares were up 1.9 per cent at US$116.30 after the company said its iPhone pre-orders were on track to beat last year's first-weekend record.

Alibaba Group Holding fell 2.4 per cent to US$63.02 after Barron's said the company's shares could lose another 50 percent of their value.