Wall Street opens lower as oil prices drop

NEW YORK (REUTERS) - 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 per cent as China ramped up exports of refined products, US producers added rigs for an eighth consecutive week, and prospects emerged for increased exports from Iraq and Nigeria.

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 US 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.

The dollar index rose for the second day, after five straight sessions of losses.

Traders have priced in an 18 percent chance of a rate hike for September and a 40.6 per cent chance for December, according to the CME Group's FedWatch tool.

Eight of the 10 major S&P 500 indexes were lower, with the energy sector dropping the most by 1.19 per cent, followed by a 0.67 per cent fall in materials.

Oil major Exxon and Chevron fell about 0.8 per cent and were among the top drags on the S&P 500 and the Dow.

At 9:36 a.m. ET (9:36 p.m Singapore time), the Dow Jones industrial average was down 84.71 points, or 0.46 per cent, at 18,467.86. The S&P 500 was down 7.87 points, or 0.36 per cent, at 2,176. The Nasdaq Composite was down 13.34 points, or 0.25 per cent, at 5,225.03.

Medivation shares jumped 20 per cent after agreeing to be bought by Pfizer for US$14 billion.