Wall Street opens lower as markets price in December rate hike

US stock indices opened lower after a spate of data from the world's largest economy, which showed a drop in unemployment claims, while the Philly manufacturing index widened unexpectedly in September, as the house price index accelerated below expectations in July. 

Yesterday, Federal Reserve policymakers voted to hold overnight interest rates unchanged at between 1.00% and 1.25% in line with expectations in today's Federal Open Market Committee meeting, while announcing the start of the process to normalize the balance sheet from October.  

The FOMC expects to start normalizing the balance sheet from October to cut down on high levels of debt and mortgage-backed securities held by the Federal Reserve, as all the members agreed on the principles of normalizing the policy through the steps detailed in the additional document submitted alongside the usual bank statement in this meeting. 

The Committee wants to cut its monetary holdings gradually by reinvesting them through the open market system, while expecting the treasury bill sales to reach $6 billion at the start of the process, while rising to $30 billion a month in 12 months.

As for mortgage-backed security sales, they will start at $4 billion and advance to $20 billion a month after a year of the process. 

In her post-meeting press conference, Fed Chair Janet Yellen said that gradual increases for interest rates are still on the table, noting that an inflation slowdown this week doesn't reflect the overall economic developments and shouldn't be considered a risk. 

Yellen said the FOMC will continue monitoring inflation and labor data, noting that if the data diverted too much from the Committee's projections, it will take the necessary decisions to mend the situation, while adding that she expected the inflation softening to be transient. 

Chances of a Federal Reserve rate hike in December jumped to 70% in financial betting markets from 50% last week. 

As of 03:22 GMT, Standard and Poor's 500 shed 0.33%, or 8.23 points to 2,500.01, while Dow Jones declined 0.16%, or 36.57 points to 22,376.02. 

Tech-heavy NASDAQ tumbled 0.75%, or 48.58 points to 6,407.47.