U.S. stocks declined on Wednesday, as Wall Street digested comments from U.S. Federal Reserve Chair Janet Yellen.
The Dow Jones Industrial Average fell 158.67 points, or 0.89 percent, to 17,729.68. The S&P 500 dropped 23.12 points, or 1.10 percent, to 2,079.51. The Nasdaq Composite Index decreased 33.08 points, or 0.64 percent, to 5,123.22.
Yellen expressed her confidence in the U.S. economy on Wednesday, saying that she was "looking forward" to an interest rate hike. "On balance, economic and financial information received since our October meeting has been consistent with our expectations of continued improvement in the labor market."
Yellen said in a prepared speech at the Economic Club of Washington. "Continuing improvement in the labor market helps strengthen confidence that inflation will move back to our 2 percent objective over the medium term," she said.
Analysts believed that Yellen's speech could be seen as a sign that she is ready to raise interest rates later this month, preventing a surprise in markets or the economy.
"Yellen supports raising rates in December, and implies support among her FOMC colleagues as long as data do not reveal significant new weakness in the next two weeks," said Chris Low, chief economist at FTN Financial, in a note.
Meanwhile, Atlanta Fed President Dennis Lockhart, a voting member of the policy-setting Federal Open Market Committee (FOMC), said Wednesday that the next Fed meeting could be "historic."
On the economic front, U.S. private sector employment increased by 217,000 jobs from October to November, beating market estimates, according to the ADP National Employment Report released Wednesday.
The ADP figure is watched closely as a pre-indicator for the key non-farm payrolls report due out Friday, which is the last jobs report for the year before the Fed decides on interest rates at its December meeting.
The CBOE Volatility Index, often referred to as Wall Street's fear gauge, increased 8.45 percent to end at 15.91 on Wednesday. In other markets, oil prices plunged as U.S. crude stockpiles continued to increase. The West Texas Intermediate for January delivery moved down 1. 91 U.S. dollars to settle at 39.94 dollars a barrel on the New York Mercantile Exchange, while Brent crude for January delivery decreased 1.95 dollars to close at 42.49 dollars a barrel on the London ICE Futures Exchange.
The U.S. dollar increased against most major currencies as Yellen made positive remarks about the country's economy, bolstering market expectation for an interest-rate hike by year-end. In late New York trading, the euro fell to 1.0623 dollars from 1.0630 dollars in the previous session, while the dollar bought 123.14 Japanese yen, higher than 122.87 yen of the previous session.
Gold futures on the COMEX division of the New York Mercantile Exchange fell as traders prepared their positions ahead of a meeting of the European Central Bank.
The most active gold contract for February delivery fell 9.7 dollars, or 0.91 percent, to settle at 1,053.80 dollars per ounce.
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