Wall St pares losses after Fed minutes

By Tanya Agrawal

(Reuters) - U.S. stocks pared losses after the latest minutes from the U.S. Federal Reserve showed that an improving job market edged the central bank closer to an interest rate hike at its July meeting.

The minutes showed that policymakers continued to express broad concerns about lagging inflation and the weak state of the world economy and that it only needed to see "some" more improvement in labor markets before hiking rates.

U.S. stocks had fallen more than 1 percent earlier in the day as investors worried about the effect of China's slowing growth ahead of the release of the minutes.

At 13:55 p.m. ET (1755 GMT) the Dow Jones industrial average was down 127 points, or 0.73 percent, at 17,384.34. The S&P 500 was down 14.23 points, or 0.68 percent, at 2,082.69 and the Nasdaq Composite was down 30.88 points, or 0.61 percent, at 5,028.47.

Energy and material stocks were whipsawed by wild swings in the Chinese market, which first fell sharply and then reversed course to end higher after the central bank injected more funds into the financial system.

The roller coaster ride in the Chinese market kept commodity prices under pressure, with oil and copper near six-year lows.

All the 10 major sectors were lower, with four of them down more than 1 percent. The energy index led the losses, slipping 2.7 percent in its worst day in about two weeks, as shares of oil majors Exxon and Chevron fell more than 2 percent.

U.S. consumer prices rose slightly in July, marking the sixth straight month of increases and suggesting inflation pressures were stabilizing enough to support expectations of a rate hike this year.

September federal funds futures implied traders expect a 45 percent chance of the Fed raising rates in September, while likelihood of a December rate increase held steady at 73 percent according to CME Group's FedWatch program.

Declining issues outnumbered advancers ones on the NYSE by 2,275 to 723. On the Nasdaq, 1,892 issues fell and 859 advanced.

The S&P 500 index showed nine new 52-week highs and 28 new lows, while the Nasdaq recorded 23 new highs and 122 new lows.

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