US open: Stocks mixed as IMF cuts US economic growth forecasts

US stocks were mixed on Tuesday as the International Monetary Fund lowered its growth forecasts for the world’s largest economy and a Federal Reserve official suggested interest rates should rise.

At 1514 BST, the Dow Jones Industrial Average fell 0.14% to 18,227.93 points, the S&P 500 dropped 0.21% to 2,156.19 points, while the Nasdaq rose 0.03% to 5,302.59 points.

At the same time, oil prices rose despite Iran and Libya continuing to increase production in the wake of OPEC’s agreement last week to limit output. West Texas Intermediate gained 0.18% to $48.90 per barrel and Brent crude edged up 0.50% to $51.15 per barrel.

The IMF on Tuesday cut its 2016 estimate for US gross domestic product to 1.6% from the 2.2% it predicted in July. However, it forecast global growth would remain steady at 3.1% this year, due to a rebound in emerging and developing economies.

Meanwhile, Richmond Fed President Jeffrey Lacker said he would have voted in favour of an interest rate hike at the September policy meeting if had been able to vote.

"I would have dissented," Lacker told reporters in Charleston, West Virginia where he gave a speech on the economic outlook.

The Fed last month decided to keep rates at between 0.25% and 0.50% as it waits for further evidence of improvement in inflation and the economy. The central bank indicated that it expects one rate increase this year.

On the company front, Deutsche Bank’s US-listed shares reversed the previous day’s decline as worries about the lender’s financial state and legal troubles receded.

On Friday, shares in Deutsche Bank surged after a media report suggested its fine from the US Department of Justice could be reduced from $14bn to $5.4bn. On Monday, the Wall Street Journal said talks between the two were ongoing and no settlement has been reached.

Darden Restaurants also advanced after the operator of Olive Garden reported first quarter earnings that exceeded analysts’ estimates.

Summit Therapeutics surged after saying it has entered into an exclusive license and collaboration agreement with Sarepta Therapeutics.

In currency markets, the pound slumped to a 31-year low against the dollar as UK Prime Minister Theresa May’s pledge to trigger Article 50 by March continued to weigh on the currency. Sterling dropped 0.76% to $1.2745 at 1548 BST on Monday.