Markets fall with oil as Fed rate hike looms

Markets fell on Tuesday.

The S&P 500 fell 0.3 percent, the STOXX Europe 600 fell 0.3 percent and the Nikkei 225 fell 0.1 percent.

Stocks were dragged down by falling oil prices. West Texas Intermediate crude fell 1.4 percent while Brent fell 0.8 percent after a report showed that oil production from Saudi Arabia is increasing.

Also possibly weighing on investors' minds was Federal Reserve monetary policy tightening as the Federal Open Market Committee kicked off its two-day meeting on Tuesday.

However, while a rate hike on Wednesday is considered likely and would be the Fed's third increase since December 2015, analysts remain mostly sanguine.

Neil Staines, head of trading at The ECU Group, noted that “when the real fed-funds rate is negative, as it is now, equities have gone up an average of 3.6% over the next three months” following a third rate rise.

Sam Stovall, chief investment strategist at CFRA, thinks that the Fed’s tightening schedule is probably already “baked into” stock prices.