US stocks fall as energy, material stocks weigh

US stocks fall as energy, material stocks weigh
A Wall St. sign outside the entrance of the New York Stock Exchange in New York's financial district August 13, 2015.
PHOTO: Reuters

Wall Street fell in a broad based retreat at the open on Wednesday as energy and material stocks were hit by the gyrations in the Chinese markets for the second day in a row.

Chinese stocks reversed sharp declines and ended higher after the central bank injected more funds into the financial system. The roller coaster ride in the market kept commodity prices under pressure, with oil and copper near six-year lows.

All the 10 major sectors were lower, with the material index's .SPLRCM 1.06 per cent fall leading the decliners. Du Pont and Dow Chemicals were down about 1 per cent and weighed the most on the index.

The energy index .SPNY decreased 1.09 per cent, weighed down by a drop of more than 1 per cent in oil majors Exxon (XOM.N), Chevron and Conocophilips.

The renewed concerns about the Chinese economy comes as investors await the minutes from last month's Federal Reserve meeting for clues on when interest rates will be increased. The data is due at 2 p.m. ET.

Economists believe the Fed will probably raise rates twice this year, with the first hike coming in September, according to the most recent Reuters poll.

Strong CPI data showed US consumer prices rose slightly in July, marking the sixth straight month of increases and suggesting inflation pressures were stabilizing enough to support expectations of a rate hike this year.

"Right now, there is a 50-50 chance for a September rate hike," said Art Hogan, chief market strategist at Wunderlich Securities in New York.

"If there is anything to push them away from September, it would be to get a better understanding of what a China economic slowdown looks like and the effect of possible additional stimulus there."

At 9:49 a.m. ET the Dow Jones industrial average .DJI was down 127.37 points, or 0.73 per cent, at 17,383.97. The S&P 500 .SPX was down 16.94 points, or 0.81 per cent, at 2,079.98 and the Nasdaq composite .IXIC was down 40.12 points, or 0.79 per cent, at 5,019.23.

Target shares jumped 4.2 per cent to $83.66 after the retailer reported a larger-than-expected rise in quarterly earnings.

Lowe's was little changed at $73.07 after the No.2 US home improvement chain's quarterly profit missed expectations.

Yum Brands rose 2.2 per cent to $86.11, a day after the owner of the KFC and Pizza Hut chains named new leaders for its China division as activist investors lobby the company to spin off that business.

Declining issues outnumbered advancing ones on the NYSE by 2,303 to 429. On the Nasdaq, 1,830 issues fell and 518 advanced.

The S&P 500 index showed one new 52-week highs and 12 new lows, while the Nasdaq recorded five new highs and 52 new lows.

 

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