Global stocks sell off, dollar gains as possible Fed hike weighed

Stocks around the world sold off on Thursday, while the U.S. dollar gained, pressuring oil prices, as increased expectations that the Federal Reserve could raise interest rates in the near term rippled through financial markets.

Investors were adjusting to the minutes of the Fed April meeting, released on Wednesday, in which the U.S. central bank opened the door to a rate hike in June.

Speaking on Thursday, New York Fed President William Dudley said the Fed is on track for a U.S. rate hike in June or July.

Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., May 16, 2016. REUTERS/Brendan McDermid

“June is definitely a live meeting depending on how the data evolves,” Dudley said.

Traders were projecting a 26-percent chance the Fed would raise rates in June, according to the CME FedWatch tool, nearly twice as high as they expected on Tuesday.

“The minutes of the FOMC meeting took the market by surprise, and there’s what I’d call a moderate adjustment going on,” said Alan Gayle, director of asset allocation at RidgeWorth Investments in Atlanta. “The ripple effects from a quicker-than-expected rate hike from the Fed would be felt across most asset classes.”

The Dow Jones industrial average .DJI was falling 191.51 points, or 1.09 percent, at 17,335.11, the S&P 500 .SPX was losing 21.44 points, or 1.05 percent, at 2,026.19 and the Nasdaq Composite .IXIC was dropping 54.58 points, or 1.15 percent, at 4,684.54.

Wal-Mart’s (WMT.N) higher-than-expected quarterly profit gave some support to U.S. stocks and the beleaguered retail sector.

Financials .SPSY, which tend to benefit in a rising rate environment, shed 1.4 percent after posting their best day in a month on Wednesday.

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Lynette Robbins