NEW YORK — Stocks remained mostly lower in midday trading Monday, but a spike in oil prices helped energy shares reverse an early decline. Investors continue to focus on the Federal Reserve, which appears on track to raise interest rates as soon as September.
KEEPING SCORE: The Dow Jones industrial average was down 127 points, or 0.8 percent, to 16,515 as of 2:35 p.m. Eastern time. The Standard & Poor's 500 index lost 17 points, or 0.9 percent, to 1,972 and the Nasdaq composite declined 47 points, or 1 percent, to 4,780.
OIL SURGE: Oil prices, which had been solidly lower earlier in the day, jumped after the U.S. Energy Department cut its estimate for the country's oil production, citing reduced output in Texas. U.S. crude surged $3.98, or nearly 9 percent, to close at $49.20 a barrel in New York Brent crude, the international standard, jumped $3.61 to $53.60 a barrel in London.
Energy stocks rose on the news. Newfield Exploration gained 6 percent and Valero Energy increased 2 percent. Oil giants Exxon and Chevron reversed early losses and were up slightly.
GO AWAY AUGUST: It's been a brutal month for investors. On the last the last trading day of August, the S&P 500 is down 5.8 percent for the month, its worst loss since May 2012. Last week the S&P 500 index briefly entered a "correction," defined as a drop of 10 percent or more from a recent peak.
Volatility has also risen sharply. The VIX, Wall Street's so-called fear gauge, soared 132 percent this month, the largest monthly jump the index has ever had.
'PRIMED TO OVERREACT:' Strategists expect the volatility in the stock market and commodities market to remain for some time. With the Federal Reserve's interest rate decision more than two weeks away and corporate earnings six weeks away, jumpy investors will have little in the way of fundamentals to build a reason to buy.
"Earnings growth is waning and stock valuations are either fully valued or even a little overvalued right now. I think the investor complacency we had earlier in the summer has made this market primed to overact to basically anything out there," said Scott Clemons, chief investment strategist at Brown Brothers Harriman Private Bank.
FED PLANS: Fed Vice Chairman Stanley Fischer said over the weekend that policymakers still had a "pretty strong case" for raising rates in September. That ran counter to recent market sentiment that China's economic slowdown and global market volatility might prompt the nation's central bank to wait. Speaking at the Fed's annual gathering in Jackson Hole, Wyoming, Fischer emphasized he was not saying what action the Fed might take at its September meeting, but analysts took his comments to mean he saw the economy moving close to satisfying the Fed's conditions for a hike. The Fed has kept rates ultra-low since the 2008 financial crisis.
ASIA'S DAY: Asian markets had another bumpy day. The Shanghai Composite Index fell as much as 2.6 percent, but recovered to close 0.8 percent lower. Hong Kong's Hang Seng also spent most of the day in the red before closing up 0.3 percent. Tokyo's Nikkei 225 lost 1.3 percent.
European stocks also fell. Germany's DAX lost 0.4 percent and France's CAC-40 lost 0.5 percent. U.K.'s markets were closed for a holiday.
BONDS, CURRENCIES: U.S. government bond prices fell. The yield on the 10-year Treasury note rose to 2.20 percent from 2.18 percent late Friday. The dollar declined to 121.22 yen from 121.38 yen on Friday. The euro rose to $1.120 from $1.1180.