NEW YORK (REUTERS) - Wall Street was lower on Wednesday as investors awaited the release of the minutes of the Federal Reserve's July policy meeting.
The Fed left interest rates unchanged at its meeting last month but said near-term risks to the economy had diminished, leaving the door open for a possible rate hike this year.
Investors will parse the minutes, due at 2:00 p.m. ET (2.00 a.m Thursday morning Singapore time), for hints on when the Fed would next raise rates, in light of New York Fed President William Dudley's hawkish comments on Tuesday.
Mr Dudley, a permanent voting member and a close ally of Fed Chair Janet Yellen, said a rate hike as soon as September was possible given evidence of wage gains and a tighter labor market. "There is a little bit of unwinding of the positions and some prudence and caution creeping into the markets, ahead of the Fed minutes," said Larry Hatheway, chief economist at GAM Holding AG.
The dollar index snapped a three-day rout on Wednesday, as traders boosted their bets on a rate hike. The move pushed oil prices lower.
At 9:33 a.m. ET, U.S. crude was down 0.9 per cent at US$46.17.
The Dow Jones industrial average was down 25.82 points, or 0.14 per cent, at 18,526.2, the S&P 500 was down 2.38 points, or 0.11 per cent, at 2,175.77 and the Nasdaq Composite index was down 6.42 points, or 0.12 per cent, at 5,220.69.
Six of the 10 major S&P 500 indexes were lower, with the interest rate sensitive utilities falling the most by 0.66 per cent.
Traders see an 18 per cent chance of a hike in September, up from 9 per cent before Dudley's Tuesday comments, while the bets jumped to 45.5 per cent from 37.4 per cent for December, according to the CME Group's FedWatch tool.
Wall Street has been trading at record highs in the past few weeks, supported by better-than-expected corporate earnings and expectations of the Fed keeping rates low.