US open: Dow declines as investors seek clues over timing of rate hike

Shortly before 1500 GMT, the Dow Jones Industrial Average was down 133 points, or 0.74%, to 17,809.58, while the S&P 500 and the Nasdaq were 0.6% and 0.4% lower respectively.

December hike on the cards

On Friday, the non-farm payrolls report for October was much stronger than expected, meaning the Federal Reserve is now a lot more likely to hike interest rates next month than it has been at any time this year.

"Investors will have plenty of time to mull over whether Friday’s job numbers mean that Janet Yellen will succeed in squeezing in a rate hike in 2015," said IG's senior market analyst Chris Beauchamp.

"Market expectations and a steadily-rising US dollar certainly points to an increased chance, but with US firms still complaining about the impact of a stronger greenback and a still-shaky situation in emerging markets, the picture is not as clear-cut as last week’s figures might suggest."

The economic calendar is largely quiet on Monday, with no key reports scheduled for release, although investors will be able to analyse a reading on labour market conditions for October at 1500 GMT, while Boston Fed President Eric Rosengren is due to speak at an event in Rhode Island at 1700 GMT.

In company news, Berkshire Hathaway declined 0.78% despite saying late on Friday that its third quarter profit more than doubled.

Dean Foods surged 7.02% after delivering a positive outlook, while property developer Toll Brothers gained 0.80% after better-than-expected preliminary sales.

Horizon Pharma soared 9.24% after its sales outlook exceeded forecast, while Weight Watchers rose 4.33% after analysts at Credit Suisse lifted their target price from $4 to $10.

Elsewhere, the dollar was broadly flat against the euro and lost 0.27% against the pound but gained 0.16% against the yen, while gold futures slid 0.03% to $1,089.45.

"The relatively calm reactions to Friday’s strong US employment report support our view that the gradual return of US interest rates towards more normal levels is unlikely to be the seismic shock that many have been fearing, particularly those following emerging markets and commodities," said Capital Economics.

"Nonetheless, we continue to expect further upward pressure on Treasury yields and on the US dollar, at least against other major currencies, and see US equities underperforming their peers in Europe and Japan."

Earlier, the Shanghai Composite rose to its highest level since late August on the back of stimulus hopes following disappointing industry data from China that dragged the rest of Asian stocks lower, with the exception of the Nikkei.

European equities were trading slightly lower, while oil prices were mixed, as West Texas Intermediate slid 0.34% to $44.14 a barrel, while Brent rose 0.42% to $47.62 a barrel.