Wall Street declines as oil prices drop; Fed in focus

By Yashaswini Swamynathan

REUTERS - Wall Street was lower on Monday as oil prices fell and investors remained cautious ahead of Federal Reserve Chair Janet Yellen's speech this week.

With the earnings season coming to an end, investor focus will shift to Yellen's speech on Friday at the annual central bankers' meeting in Jackson Hole, Wyoming to see whether the Fed is keen on raising interest rates in the coming months.

The case for an imminent rate hike was strengthened by Fed Vice Chairman Stanley Fischer's comments that the U.S. economy was close to hitting job and inflation targets.

Traders have priced in an 18 percent chance of a rate hike for September, up from 12 percent odds seen on Friday. That measure rose to 40.6 percent for December from 39.1 percent, according to the CME Group's FedWatch tool.

Oil prices fell more than 2 percent, retreating from last week's two-month highs, on worries about burgeoning Chinese fuel exports, more Iraqi and Nigerian crude shipments and a rising U.S. oil rig count. [O/R]

"This morning's action is predicated on the perception of what's going to happen in Jackson Hole as well with the weakness in oil prices which have had an impressive run in recent weeks," said Andre Bakhos, managing director at Janlyn Capital LLC in Bernardsville, New Jersey.

Investor sentiment was earlier boosted by a couple of multi-billion dollar deals on Monday, including Pfizer's $14 billion acquisition of cancer drug maker Medivation.

Medivation's shares jumped nearly 20 percent, while Dow component Pfizer rose 0.6 percent.

At 11:27 a.m. ET (1527 GMT), the Dow Jones industrial average was down 52.94 points, or 0.29 percent, at 18,499.63.

The S&P 500 was down 5.54 points, or 0.25 percent, at 2,178.33.

The Nasdaq Composite was down 8.37 points, or 0.16 percent, at 5,230.01.

Eight of the 10 major S&P 500 indexes were lower, with the energy index falling the most by 1.06 percent, followed by a 0.58 percent decline in materials.

Syngenta's U.S.-listed shares rose nearly 10.5 percent after a U.S. national security panel cleared ChemChina's $43 billion takeover of the Swiss pesticides and seeds group.

Chipmaker Intersil jumped 20.4 percent $18.83 after a source told Reuters that Japan's Renesas was in the final stages of negotiations to acquire the company for about $2.99 billion.

Declining issues outnumbered advancing ones on the NYSE by 1,853 to 992. On the Nasdaq, 1,460 issues fell and 1,217.

The S&P 500 index showed 11 new 52-week highs and no new lows, while the Nasdaq recorded 81 new highs and 15 new lows.

(Reporting by Yashaswini Swamynathan in Bengaluru; Editing by Don Sebastian)