US open: Dow plunges over 140 points ahead of FOMC minutes

US equities turned south early on Wednesday, after a reading on consumer prices fueled the possibility of an September rate hike by the Federal Reserve

Just after 1500 BST, the Dow Jones Industrial Average was down by 145 points, while the S&P 500 and the Nasdaq were 14 and 34 points lower.

Wednesday data

The rate of US inflation decreased in July, with both the headline and core consumer prices index (CPI) increasing 0.1% month-on-month, short of consensus forecasts for a 0.2% rise.

Year-on-year figures were in line with expectations, however, with headline CPI up 0.2%, and up from the 0.1% annual growth recorded in June.

"A surprisingly weak set of inflation figures that suggests that there is still more slack in the US economy than we had believed," said Paul Ashworth, chief US economist at Capital Economics.

Meanwhile the Federal Reserve will release minutes from the July meeting of the Federal Open Market Committee at 1900 BST.

“Fed minutes won’t give any policymaker response to the China currency devaluation but will nonetheless be important to add some colour to the last statement,” said CMC Markets’ analyst Jasper Lawler.

“Any explanation of the additional word “some” with regard to improvement the Fed is looking for in the labour market would be useful.

“Also, statements that generalise the general view on when a rate hike should take place will be important.”

Meanwhile, the Mortgage Bankers Association (MBA) said its seasonally adjusted index of application activity, which covers home purchase demand and refinancing demand, climbed 3.6% in the week ended 14 August.

The seasonally adjusted sub-index of refinancing applications jumped 7%, reaching its highest level since May.

Germany gives green light to Greece bailout

Elsewhere, European stocks fell amid disappointing earnings and ongoing worries about China, although there was some good news as it emerged the German parliament has backed Greece’s third bailout.

Over in Asia, Chinese stocks reversed falls to close higher, while volatility saw other indices in the region fall.

The dollar was broadly flat against the main currencies, while gold futures climbed 0.50% to $1,122.50.

Oil prices declined, with West Texas Intermediate losing 1.02% to $42.19 a barrel, while Brent shed 0.39% to $48.62 a barrel.

In company news, Lowe’s Cos. rose 0.36% even though the home-improvement retailer posted weaker-than-expected earnings for its second quarter.

Staples Inc. rose 0.49% despite missing forecast with its quarterly revenue, while retailer Target Corp. surged 4.48% after posting strong second-quarter results and lifting its full-year outlook.