US STOCKS-Wall St drops amid worry over N.Korea test, rate outlook
* North Korea conducts fifth nuclear test
* Fed's Rosengren says increasingly risky to delay rate hike
* Energy shares fall as oil retreats
* Indexes down: Dow 1.6 pct, S&P 1.8 pct, Nasdaq 2.0 pct (Updates to late afternoon)
By Chuck Mikolajczak
NEW YORK, Sept 9 (Reuters) - U.S. stocks sold off on Friday, putting the S&P 500 on pace for its worst day in over two months as investor nervousness increased following a nuclear test by North Korea and comments by Federal Reserve officials that hinted at a U.S. interest rate hike.
North Korea conducted its fifth and biggest nuclear test on Friday and said it had mastered the ability to mount a warhead on a ballistic missile, drawing condemnation from the United States as well as China, Pyongyang's main ally.
There was further pressure on the U.S. equity market after Boston Fed President Eric Rosengren, a historically dovish policymaker, said the U.S. central bank faced increasing risks if it waited too much longer to raise interest rates. He said a gradual monetary policy tightening was likely appropriate, although he added the Fed was unlikely to raise rates too rapidly.
But Fed Governor Daniel Tarullo, also a voting member, was more cautious and said on Friday in an interview with CNBC he wanted to see more evidence of U.S. inflation rising back toward the Fed's 2 percent target, although he would not discount the possibility of a hike this year. Continuación...