Stocks tanked on Wednesday, taking the Dow back into negative territory for 2015, and crude oil slumped below $40 per barrel again.
Federal Reserve chair Janet Yellen threw her support behind an interest rate hike later this month.
First, the scoreboard:
- Dow: 17,742.07, -146.28, (-0.82%)
- S&P 500: 2,081.57, -21.06, (-1.00%)
- Nasdaq: 5,129.61, -26.69, (-0.52%)
And now, Wednesday’s top stories:
- Janet Yellen is ready to hike rates in two weeks. In a speech at the Economic Club of Washington, D.C., she said that were the FOMC to delay hiking its benchmark rate much longer, it may have to overreact later on, and that could have disastrous consequences — including a recession. She acknowledged that the labour market’s progress has moved it closer to maximum employment, and said she continued to expect inflation to rise to the Fed’s 2% target.
- We also got the Fed’s Beige Book, which mirrored Yellen’s assessment of the economy: it continues to expand at a steady pace. The Fed’s collection of anecdotes from the economies in its 12 districts showed consumer spending improved nearly everywhere, as did wage pressures. The housing market was also strong, although sales slowed down in red-hot New York City. These anecdotes will inform the Fed’s deliberations at its meetings on December 16 and 17.
- Iran says most of the 12 members of oil group OPEC are willing to cut their output. The group meets on Friday in Vienna and will discuss its production levels. Shana, the Iranian oil ministry website, cited a ministry official and said Saudi Arabia and Persian Gulf states were in opposition to cutting production. Iran had announced that it would boost daily production by 500,000 barrels when economic sanctions are lifted, which could happen early next year.
- Crude oil prices sank 4% in trade to as low as $39.88. Oil lost some ground after the OPEC news, and again after the Energy Information Administration reported a build in inventories by 1.2 million barrels last week. Brent crude, the international benchmark, also fell 4% to as low as $39.86 per barrel.
- ADP Research Institute said private payrolls grew 217,000 in November. Employment growth was led by the service sector, which saw an increase by 190,000. The smaller goods-producing sector added 13,000 jobs. “We place limited weight on the ADP employment report given the history of revisions and frequent divergence with the Labour Department’s initial estimates,” Barclays economists wrote to clients. The Department of Labour will release its official numbers on Friday.
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