US open: Stocks fall as traders look ahead to Fed's policy meeting

US stocks fell on Friday, led by energy and financial shares, as oil prices slumped and traders looked ahead to next week’s Federal Reserve policy decision.

At 1529 BST the Dow Jones Industrial Average dropped 0.59% to 18,107.10 points, the S&P 500 declined 0.61% to 2,134.07 points and the Nasdaq slid 0.41% to 5,228.32 points.

At the same time oil prices were under pressure on news of rising Iranian exports and returning supplies from Libya and Nigeria following interruptions. West Texas Intermediate crude dropped 2.3% to $42.91 per barrel and Brent fell 1.9% to $45.70 per barrel.

Meanwhile, US inflation rose more than expected in August as rising rents and health care costs offset a fall in gasoline prices.

The Labor Department said the consumer price index (CPI) increased 0.2% month-on-month in August after being unchanged in July, beating forecasts for 0.1% growth. On an annualised basis, CPI rose 1.1% in August, up from 0.8% in July and more than the 1.0% expected.

Core inflation, which strips out energy and food prices, rose 0.3% month-on-month and 2.3% year-on-year last month following a 0.1% monthly increase and a 2.2% yearly gain in July. Economists had expected a month-on-month rise in core CPI of 0.2% and no change to the annualised rate.

“Growth in consumer prices for August was solid if unspectacular, and today’s data is unlikely to persuade Fed Chair Janet Yellen to pull the trigger on an interest rate hike just yet,” said Dennis de Jong, managing director of UFX.com.

“Analysts had speculated that next week’s Fed meeting could bring with it a rate increase, but a mixed bag of recent financial data could instead see Yellen and Co. err on the side of caution.”

The Fed meets on 20-21 September to decide on interest rates.

Elsewhere, a report showed US consumer sentiment remained unchanged in September. The University of Michigan’s preliminary consumer sentiment index stayed at 89.5, missing forecasts for a reading of 90.5.

“Overall, the recent weakness of retail sales suggests that third-quarter real consumption growth will be between 2.5% and 3% annualised, which is a little weaker than we previously thought,” said Andrew Hunter, US economist at Capital Economics.

“But with consumer confidence holding steady at a high level and labour market conditions continuing to gradually improve, this is unlikely to be the start of a sustained slowdown.”

On the company front, Oracle Corp. slumped after the enterprise software company late Thursday reported first quarter profit and revenue and fell short of estimates.

The US-listed shares of Deutsche Bank fell after the US Justice Department asked the German bank to pay $14bn to settle an investigation into mortgage-backed securities.

Novavax Inc. shares tumbled after the vaccine company late Thursday said one of its lung infection vaccines missed targets in its late-stage clinical trial.

Technology giant Apple was a little lower following strong gains in the previous session as its new iPhone 7 went on sale.