Dow Jones Industrial Average slipped and went down 50 points after the U.S. Federal Reserve Chairwoman Janet Yellen hinted that an interest rate hike can happen in December.
As reported by Money Morning, Yellen said that improvements in the U.S. labor market and an expected return to the target inflation rate of 2 percent are the reasons for the rate hike possibility.
And according to the CME Group's FedWatch, the possibility of a rate hike rose from 52 percent to 58 percent. Meanwhile, the October private employment report from ADP and Moody's Analytics showed that private employers added 182,000 jobs last month, beating consensus expectations by a slight margin.
In a similar report by ABC News, Yellen's announcement also resulted into the U.S. dollar getting pushed higher. The rise of the dollar had secondary impact in causing the price of oil to fall, which in turn pushed oil, gas and energy stocks lower.
Moreover, apart from the Dow Jones Industrial Average dropping down 50.57 points or 0.28 percent to 17,868 in midday trading Wednesday, the S&P 500 index also dropped by 7.48 points or 0.35 percent to 2,102. The NASDAQ composite index also went down by 2.65 points or 0.1 percent to 5,142.48.
But for the week, the Dow Jones Industrial Average is up by 204.04 points or 1.2 percent, the S&P 500 by 22.95 points or 1.1 percent and the NASDAQ by 88.73 points or 1.8 percent.
As reported by the International Business Times, eight of the 10 S&P 500 sectors closed down Wednesday morning led by energy, materials and consumer discretionary goods Merck & Co. Inc. The shares led Dow 30 company gains while UnitedHealth Group Inc. led the declines.
Testifying before the House Financial Services Committee on Wednesday, Yellen gave one of the most strongly worded signals that the country would begin pushing interest rates upward next month for the first time in almost a decade.
The speech, which lauded that Federal Reserve's effort to avoid future bank failures, she said that a "very gradual" rate lift-off was a "live possibility" after the next Fed meeting of governors on Dec. 15 to 16.
The said interest hike would gradually increase the cost of borrowing, thereby affecting everything from business loans to credit card interest rates.
For those who want to know what the Dow Industrial Average is, it is a stock market index created by Wall Street Journal editor and Dow Jones & Company co-founder, Charles Dow. Right now it is owned by S&P Dow Jones Indices.
