Wall Street set to open lower as oil dips

By Tanya Agrawal

(Reuters) - Wall Street looked set to open lower on Tuesday as oil prices fell and investors reassessed the possibility of a near-term rise in U.S. interest rates.

Oil prices were down about 2 percent after the International Energy Agency said a sharp slowdown in global oil demand growth, meant the crude market will be oversupplied at least through the first six months of 2017.

U.S. stocks racked up their strongest gain in two months on Monday after Federal Reserve Board Governor Lael Brainard stuck to her dovish stance on interest rates and urged caution about removing monetary stimulus too quickly.

 

However, any sense of calm in markets looked fragile after three volatile trading days, especially on Friday, that saw bond yields soar and stocks rack up heavy losses on concerns that the Fed would raise interest rates at it Sept 20-21 meeting.

"The market is in a downward spiral and needs to complete the pullback it began last Friday," said Peter Cardillo, chief market economist at First Standard Financial in New York.

"Falling oil prices and the election is also causing some uncertainty and traders are caught in the middle of a divided Fed."

Futures traders cut the chances of a Fed rate hike at the central bank's Sept 20-21 meeting to just 15 percent from 21 percent, according to the CME Group's FedWatch tool.

Dow e-minis were down 111 points, or 0.61 percent, with 10,274 contracts changing hands at 8:24 a.m. ET (1224 GMT).

S&P 500 e-minis were down 13.5 points, or 0.63 percent, with 230,278 contracts traded.

Nasdaq 100 e-minis were down 25.25 points, or 0.53 percent, on volume of 11,366 contracts.

Data on Tuesday showed China's factory output and retail sales grew faster than expected in August.

The dollar index was higher on Tuesday, marking the fifth straight day of gains, while gold prices edged up too.

Apple was up 1.7 percent at $107.20 in premarket trading after Sprint said pre-orders for the latest iPhones increased nearly four times. Sprint was slightly lower at $6.91.

Netflix shares dropped 1.5 percent to $97.55 after Macquarie downgraded the stock to "underperform".

Anadarko Petroleum was down 4.4 percent at $55.30 after it agreed to buy Freeport McMoRan's Gulf of Mexico assets. Freeport was down 1.7 percent at $10.89.

Intersil jumped 9.8 percent to $21.70 after Renesas Electronics agreed to buy the chipmaker.

(Reporting by Tanya Agrawal; Editing by Savio D'Souza)