U.S. stocks drop amid oil slides, rate hike concern

U.S. stocks closed down more than one percent on Tuesday, as investors kept a close eye on falling oil prices and pondered over when the U.S. Federal Reserve would hike interest rate.

The Dow Jones Industrial Average shed 258.32 points, or 1.41 percent, to 18,066.75. The S&P 500 was down 32.02 points, or 1.48 percent, to 2,127.02. The Nasdaq Composite Index lost 56.63 points, or 1.09 percent, to 5,155.25.

Oil prices dropped on Tuesday, with both U.S. oil and Brent crude falling over two percent, as the International Energy Agency said global oil demand growth is slowing at a faster pace than initially predicted.

The energy sector fell 2.86 percent Tuesday, leading all S&P 500 sectors lower.

Meanwhile, investors still sifted through remarks by U.S. Federal Reserve officials.

Fed Governor Lael Brainard, a voting member of the central bank's policymaking committee, said in a speech on Monday that while economic progress continues it would be wise for the Fed to keep monetary policy loose.

"Brainard thinks asymmetric risk in the 'new normal' economy calls for monetary prudence in the removal of policy accommodation. She will not be pushing for a hike in next week's FOMC meeting," said Jay Morelock, an economist at FTN Financial, in a note.

Atlanta Fed President Dennis Lockhart, however, said current economic conditions called for a "serious discussion" on rates at the September meeting, media reported.

Traders have expected a 15 percent rate hike in September, according to CME Group's FedWatch tool.

The Federal Open Market Committee, the Fed's monetary policy arm, is set to meet on Sept. 20-21. Enditem