US open: Stocks fall ahead of Fed meeting minutes

US stocks declined on Wednesday ahead of the Federal Reserve’s meeting minutes, which may provide hints on the next interest rate hike.

At 1452 BST the Dow Jones Industrial Average fell 0.32% to 18,493.47 points, the S&P 500 dropped 0.25% to 2,172.70 points and the Nasdaq decreased 0.24% to 5,215.85 points.

Oil prices also slid before the release of the US weekly crude inventories data from the Energy Information Administration at 1530 BST and after reports Saudi Arabia could boost oil output to a new record in August.

West Texas Intermediate crude edged down 0.99% to $46.12 per barrel and Brent slipped 0.36% to $49.05 per barrel.

Meanwhile, investors are highly anticipating the Fed’s minutes of its 26-27 July policy meeting at 1900 BST. At last month’s meeting the Fed decided to keep interest rates unchanged amid risks to the global economy including Brexit. However, the central bank struck a more positive tone saying the “near-term risks to the economic outlook had diminished”.

“The minutes will be important in determining the degree of confidence that officials had about their ability to raise rates at least once this year,” said Societe Generale.

“On that front, it will be crucial to gauge whether ‘many’, ‘most’, or ‘some’ officials felt that the strength in June payrolls repudiated the weakness in the May report.”

Craig Erlam, senior market analyst at Oanda, said a rate hike this year remains a very “real possibility” if the Fed believes Brexit will have limited impact on the economy and the outlook remains the same as it was before European Union referendum.

“That said, growth in the second quarter was very disappointing again and while the two revisions could change our view on that, it is likely to complicate things," he said.

Federal Reserve Bank of St. Louis President James Bullard may also provide further clues behind the central bank’s plans for interest rates when he speaks in his city at 1800 BST.

His speech follows two hawkish statements from fellow Fed policymakers William Dudley and Dennis Lockhart on Tuesday, who both separately suggested an interest rate hike was on the table at the next meeting on 20-21 September.

The market is currently pricing in an 82% chance that the Fed will raise interest rates by 25 to 50 basis points, according to the CME Group FedWatch tool.

On the corporate front, Lowe’s shares slumped after reporting quarterly earnings and revenues that fell short of analysts’ estimates and lowering its full year guidance.

Staples was also in the red after the office supplies retailer forecast its 15th consecutive quarter of falling sales. It also reported a worse-than-expected drop in second quarter sales.

Target declined as it posted drop in second quarter earnings and cut its sales estimate for the rest of the year due to a “difficult retail environment”.

Cisco Systems was weaker following a report the company is planning to axe 20% of its workforce.

Biotech company StemCells tumbled following strong gains in the previous session on news it was planning to merge with Israel’s Microbot Medical.