
Stocks Get Hammered Again by Oil Selloff, Rate Worries
For the markets, it was deja vu all over again.
Another day of skidding oil prices and higher interest rate forecasts pulled stocks lower on Thursday, just as they did the day before.
The S&P 500 closed down 0.69%, the Dow Jones Industrial Average fell 0.89%, and the Nasdaq slid 0.37%.
Investors are still getting used to the idea that rates are likely to rise next month for the first time in nearly a decade. And lest anyone tried to forget, Federal Reserve officials were out in force on Thursday to remind them.
St. Louis Fed President James Bullard argued for a rate hike during one of the many Fed speeches throughout the day.
"While the [Fed's] goals have been met, the policy settings remain as extreme as they have been at any time since the recession ended in 2009," Bullard told an audience at the Cato monetary policy conference in Washington. "There is no reason to continue to experiment with extreme policy settings."
Richmond Fed President Jeffrey Lacker also appeared to back a rate hike, noting that the Fed could still influence inflation regardless of a weak "Phillips Curve."
Economists have argued recently that the relationship between lower unemployment and higher inflation, the Phillips Curve, had broken down and that the central bank should wait for higher wages before hiking rates.
"On the whole, Fed speakers so far have stuck to the script, leaving traders little reason to adjust their "likely but not inevitable" expectation for a December rate hike," Matt Weller, senior market analyst at Forex.com, wrote in a note.
Investors have been cautious as they await further clues as to when the Fed could hike interest rates for the first time in nearly a decade. The odds are greater on a December rate hike after a stellar October jobs report supported the case for tighter monetary policy.
Financials stocks were the worst performers Thursday as a December rate hike appeared more likely. Major banks Bankof America (BAC) - Get Report , Citigroup (C) - Get Report , Goldman Sachs (GS) - Get Report and Barclays (BCS) - Get Report were lower, while the Financial Select Sector SPDR ETF (XLF) - Get Report dropped 0.84%.
Stocks also ended lower after a greater-than-expected increase in crude inventories. Prices have been under pressure for a year as weakening global demand exacerbates continued oversupply. West Texas Intermediate crude dropped 2.9% to $41.70 a barrel on Thursday.
Weaker crude oil prices hit the energy sector hard. Major oilers including Exxon Mobil (XOM) - Get Report , Chevron (CVX) - Get Report , Royal Dutch Shell (RDS.A) , BP (BP) - Get Report , Total (TOT) - Get Report and Schlumberger (SLB) - Get Report were all lower, while the Energy Select Sector SPDR ETF (XLE) - Get Report dropped 1.5%.








