US open: Stocks drop as traders monitor oil prices, weigh earnings

At 1449 BST, the Dow Jones Industrial Average fell 0.56% to 18,492.79 points, the S&P 500 dropped 0.54% to 2,175.28 points and the Nasdaq declined 0.42% to 5,218.10.

At the same time, oil prices were volatile as the dollar strengthened and investors looked ahead to an unofficial OPEC meeting next month, with hopes of a deal on stabilising the market. Brent crude fell 0.09% to $50.84 per barrel and West Texas Intermediate increased 0.37% to $48.40 per barrel at 1430 BST.

The dollar was higher against other major currencies, rising 1.01% against the pound, increasing 0.30% versus the euro and climbing 0.38% against the yen.

Meanwhile, the Baker Hughes oil rig count data at 1800 BST will be closely eyed. An eighth consecutive weekly rise may further alleviate some of the upward pressure on oil prices.

In the absence of any other US data, the market also continued to mull the Federal Reserve’s July meeting minutes, which showed policymakers were divided on the timing of the next interest rate hike.

“On a quiet Friday, focus will remain on the oil market and the Fed as traders try to dissect the wide ranging views of policy makers in order to anticipate when the next rate hike will actually happen.

“We had more comments from policy makers on Thursday but once again, there was no consistent messages and John Williams – who earlier in the week sent the dollar into a tailspin after suggesting that the inflation target should be higher, which suggested there was little desire to raise rates – claimed there should be a hike sooner rather than later.

“Meanwhile we also heard from a couple of his colleagues – William Dudley and Robert Kaplan – and again the message wasn’t necessarily consistent with Dudley reiterating that the US economy is strong, as displayed by the labour market data, while Kaplan claimed that while there is some room for manoeuvre on interest rates, it’s limited. With other messages from policy makers being more inconsistent again, it’s no surprise that the markets are changing their mind on the timing of the next hike on almost a daily basis.”

Corporate results were also in focus.

Footlocker shares advanced after reporting second quarter results that beat expectations. In the six months ended 30 July, earnings rose to $127m or 94 cents a share, from $119m or 84 cents a share in the same period last year.

Deere & Company rallied as the maker of agricultural machinery reported a 1.3% increase in earnings per share in the third quarter to $1.55, surpassing estimates of 95 cents.

Estee Lauder declined as it revealed quarterly net income fell to $93.5m from $153m a year earlier, due to restructuring and other charges. The beauty products manufacturer also predicted fiscal 2017 adjusted profit which fell short of analysts’ forecasts.

Gap recovered from earlier lows after the retailer’s full-year profit forecast missed analysts’ expectations.