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U.S. futures lower as markets digest Fed remarks ahead of Yellen

Published 08/22/2016, 07:02 AM
Updated 08/22/2016, 07:02 AM
© Reuters.  Wall Street futures lower after hawkish comments from Fed vice chair

© Reuters. Wall Street futures lower after hawkish comments from Fed vice chair

Investing.com –Wall Street futures pointed to a lower open on Monday as investors weighed weekend comments from the Federal Reserve (Fed) and looked ahead to a speech by the U.S. central bank chief Janet Yellen on Friday.

The blue-chip Dow futures lost 43 points, or 0.23%, by 10:56AM GMT, or 6:56AM ET, the S&P 500 futures fell 4 points, or 0.19%, while the tech-heavy Nasdaq 100 futures traded down 9 points, or 0.20%.

Fed vice chair Stanley Fischer said on Sunday that the U.S. economy was close to hitting the central bank's targets for full employment and 2% inflation.

Fischer's speech was just the latest piece of hawkish rhetoric from top Fed officials. Last week, San Francisco Fed President John Williams, New York Fed Chief William Dudley and Atlanta Fed President Dennis Lockhart all said a September rate hike may be on the table.

Yellen will give a speech at the end of the week at the Economic Symposium at Jackson Hole and was widely expected to show an optimistic outlook on the U.S. economy that could reinforce these recent comments that the next meeting was “in play”.

However, according to Investing.com's Fed Rate Monitor Tool, investors are pricing in just a 15% chance of a rate hike by September, up from just 6% at the start of last week with the probability of an increase not passing the 50% threshold until the February 2017 meeting.

With no major macro data set for release on Monday, Fischer’s remarks were helping push the dollar higher against major rivals on, while causing gold to slump to a two-week low.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, gained 0.25% to 94.72 by 10:58 AM GMT, or 6:58AM ET, while gold for December delivery on the Comex division of the New York Mercantile Exchange dropped 0.43%, or $5.85, to $1,340.35.

Meanwhile, oil snapped a seven-session win streak on Monday as reports surfaced that Iraq would increase crude exports by 5%, further undermining recent speculation that OPEC could take measures to control output when it meets on the sidelines of the International Energy Forum in September.

Additionally, indications of an ongoing recovery in U.S. drilling activity also kept prices under pressure. According to oilfield services provider Baker Hughes, the number of rigs drilling for oil in the U.S. last week increased by 10 to 406, the eighth consecutive weekly rise and the 11th increase in 12 weeks.

U.S. crude futures tumbled 2.79% to $47.74 by 11:00AM GMT, or 9:00AM ET, while Brent oil slumped 3.20% to $49.25.

In company news, Medivation Inc (NASDAQ:MDVN) jumped 19% in pre-market trade after reports that Pfizer Inc (NYSE:PFE) set to announce a deal to acquire the U.S. cancer drug company for close to $14 billion.

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