Stocks fall after Yellen comments

Stocks retreated modestly Wednesday after Federal Reserve Chairwoman Janet Yellen said Fed policymakers were still considering raising interest rates in December.

Yellen’s comments pushed the U.S. dollar higher. The dollar’s rise had a secondary impact of causing oil to fall, which in turn affected oil, gas and energy stocks. U.S. government bond prices also fell.

The Dow Jones industrial average lost 50.57 points, or 0.3%, to 17,867.58. The Standard & Poor’s 500 index fell 7.48 points, or 0.4%, to 2,102.31, and the Nasdaq fell 2.65 points, or 0.1%, to 5,142.48.

During her regular semiannual testimony to Congress, Yellen said that an interest rate hike in December would be a “live possibility” if the economy stays on track.

Yellen did stress that no decision had been made yet and that a move in December will depend on how the economy fares between now and then.

At its Dec. 15-16 meeting, the Fed will consider raising a key interest rate from a record low of near zero if the economy continues to grow at a strong-enough pace to keep adding jobs and push annual inflation toward the Fed’s 2% target, Yellen said.

Once considered an unlikely scenario, a December rate hike seems more likely by the day. Stocks have recovered nearly all of their losses from the summer, financial markets have calmed in China and elsewhere, and the U.S. economy continues to slowly improve.

Securities that allow investors to bet on which way the Fed will move interest rates are now pricing in a roughly 60% chance of the Fed raising rates next month, according to data from the Chicago Mercantile Exchange.

Investors will closely parse the October jobs report, which is due out Friday. Investors expect that U.S. employers added 185,000 jobs last month and that the unemployment rate remained steady at 5.1%.

One of the biggest victims of Yellen’s comments, inadvertently, was oil and gas stocks. Yellen’s comments caused the U.S. dollar to strengthen and oil prices to decline sharply.

Crude oil fell $1.58, or 3.3%, to $46.32 a barrel, reversing after two days of gains. Brent crude, which is used to price international oils, fell $1.96, or 4%, to $48.58 a barrel.

Some of the biggest gainers Monday and Tuesday were among the biggest decliners Wednesday. Oilfield servicing company Baker Hughes fell $2.90, or 5.3%, to $51.56. Newfield Exploration lost $1.84, or 4.6%, to $38.30.

Bond prices fell after Yellen’s comments. The yield on the 10-year Treasury note rose to 2.22% from 2.21% the day before.