By Sara Sjolin, MarketWatch

Investors hope Fed dove Brainard can calm market fears

Wall Street looked set for another day of losses Monday as fears the Federal Reserve will soon raise interest rates continued to spook investors out of assets considered risky, such as equities.

Traders were waiting for a speech by Fed dove Lael Brainard later in the day, hoping she could dispel concerns a rate increase is imminent.

Stock futures were off their worst levels but still firmly lower. The Dow Jones Industrial Average futures slid 67 points, or 0.4%, to 17,900, while those for the S&P 500 index dropped 7.25 points, or 0.3%, to 2,108.50. Futures for the Nasdaq-100 index lost 20.75 points, or 0.4%, to 4,646.50.

Fed jitters: The sharp declines follow a brutal session on Wall Street on Friday (http://www.marketwatch.com/story/us-stock-futures-tilt-lower-with-oil-prices-fed-speakers-in-focus-2016-09-09), when the Dow industrials lost almost 400 points and the S&P 500 index dropped 2.5% after hawkish Fed comments. Boston Fed President Eric Rosengren said a "reasonable case can be made" for raising interest rates, fueling expectations it will definitely happen this year. Both the Dow and the S&P plunged below their 50-day moving averages (http://www.marketwatch.com/story/the-stock-market-rout-just-drove-sp-500-dow-below-a-key-level-2016-09-09) during Friday's rout.

Read:Gundlach's talk of a surprise Fed tightening set the stage for a stock, bond-market rout (http://www.marketwatch.com/story/how-gundlachs-fed-tightening-talk-set-stage-for-a-stock-bond-market-meltdown-2016-09-09)

"Should we continue to get a consistent hawkish message from policy makers ahead of the [Fed's] blackout period, we could see the implied probability of a hike in September ramp up considerably which based on the moves since Friday, would be bad news for equity markets," said Craig Erlam,

"The catalyst for this could once again come from Fed policy makers, with Lael Brainard, Neel Kashkari and Dennis Lockhart all scheduled to speak [today]," he added.

Investors are particularly waiting for Brainard's speech, hoping she--as the Fed's resident dove--will ease market fears that a rate increase is imminent.

"Further hawkish commentary and any indication that a rate hike is likely could trigger another wave of repricing for September and December, which in turn could see the dollar and Treasury yields on the rise again and equities coming under pressure," Erlam said.

Brainard is due to speak at the Chicago Council on Global Affairs at 1:15 p.m. Eastern Time.

Read:Clinton Treasury secretary contender could send key signal about crucial Fed meeting (http://www.marketwatch.com/story/clinton-treasury-secretary-contender-is-key-vote-at-crucial-fed-meeting-2016-09-01)

Atlanta Fed President Dennis Lockhart will give a speech on monetary policy to the National Association for Business Economics in Atlanta at 8 a.m. Eastern. Later, Minneapolis Fed President Neel Kashkari's speaks at the St. Paul BOMA's Thought Leader Seminar at 1 p.m. Eastern.

After Monday, the Fed enters its "blackout" period ahead of its Sept. 20-21 policy-setting meeting.

The probability of a rate tightening at that meeting rose to 27% on Friday, from 18% on Thursday, following Rosengren's comments, according to the CME's Fed Watch Tool.

The CBOE Market Volatility Index also spiked on Friday, surging 40% to above 16 around the time of the U.S. market close, marking its biggest one-day move since the U.K.'s Brexit vote in June (http://www.marketwatch.com/story/wall-streets-fear-gauge-jumped-the-most-since-brexit-2016-09-09). The index continued to rise on Monday, up 17% to 20.39 (http://www.marketwatch.com/story/wall-street-fear-level-jumps-to-highest-since-brexit-vote-2016-09-12).

Read:Investors brace for volatility after Friday stock-market rout (http://www.marketwatch.com/story/investors-brace-for-volatility-after-friday-stock-market-rout-2016-09-10)

(http://www.marketwatch.com/story/investors-brace-for-volatility-after-friday-stock-market-rout-2016-09-10) (http://www.marketwatch.com/story/investors-brace-for-volatility-after-friday-stock-market-rout-2016-09-10)Bond selloff: Treasury prices fell further on Monday, pushing yields higher (http://www.marketwatch.com/story/these-investors-will-get-hit-hardest-as-global-interest-rates-rise-2016-09-09). The yield on the 10-year Treasury note rose 1 basis point to 1.690%. The interest rate on the U.S. benchmark note on Friday climbed 5.7 basis points to 1.671%, its highest level since June 23, the day of the Brexit vote.

Clinton health scare: Investors on Monday were also paying close attention to Democratic presidential candidate Hillary Clinton. Video footage showed her stumbling into her van after she left early from New York City's ceremony marking the 15th year since the September 11th terrorist attacks.

Clinton's doctor said she was diagnosed with pneumonia on Friday, but the incident has fueled concerns it will boost Republican presidential candidate Donald Trump's campaign, which is seen as threatening financial markets (http://www.marketwatch.com/story/how-hillary-clintons-health-scare-threatens-the-markets-2016-09-11).

Oil blues: Crude oil prices stumbled 2.4% (http://www.marketwatch.com/story/oil-prices-stumble-after-rising-baker-hughes-rig-count-2016-09-12) to $44.80 a barrel after a rise in the Baker Hughes rig count last week added to concerns about an oversupply in the market. The slide weighed on U.S. major oil companies, with shares of Chesapeake Energy Corp.(CHK) off 2.5% ahead of the bell and Exxon Mobil Corp.(XOM) down 1%.

The VelocityShares 3x Long Crude ETN(UWTI) lost 7% premarket as well.

Movers and shakers: Shares of Tesla Motors Inc.(TSLA) fell 0.7% in premarket trade. The electric-car maker on Sunday announced an upgrade for its Autopilot feature (http://www.marketwatch.com/story/tesla-makes-big-tweaks-to-autopilot-to-improve-safety-2016-09-11) that could significantly improve the safety if its semiautonomous driving system.

Praxair Inc.(PX) lost 1.7% ahead of the bell after the industrial-gas company and German peer Linde AG (LIN.XE) said they have ended merger talks (http://www.marketwatch.com/story/praxair-linde-call-a-halt-to-merger-talks-2016-09-12). Linde shares tanked 8%.

Perrigo Co. PLC(PRGO) climbed 3.6% after activist investor Starboard Value LP disclosed a 4.6% stake in the drugmaker (http://www.marketwatch.com/story/perrigos-stock-surges-after-starboard-discloses-stake-2016-09-12).

Manchester United Ltd.(MANU) could also be active after the soccer club said it lost GBP957,000 ($1.27 million) in its fiscal fourth quarter.

Other markets: The dollar struggled for direction (http://www.marketwatch.com/story/dollar-steadies-as-investors-await-speech-from-feds-brainard-2016-09-12) after its rally on Friday, with the ICE Dollar Index edging up 0.1% to 95.414.

Silver dropped 2.7%, while gold moved 0.7% lower.

Stocks in Asia caught up with Friday's rout in the U.S., dropping sharply across the board (http://www.marketwatch.com/story/asian-stocks-plunge-following-wall-streets-friday-rout-2016-09-11). It was the same story in Europe (http://www.marketwatch.com/story/european-stocks-punched-lower-on-prospect-of-higher-us-borrowing-rates-2016-09-12), where the Stoxx Europe 600 index gave up 1.8%.

(END) Dow Jones Newswires

September 12, 2016 08:08 ET (12:08 GMT)

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