Stocks retreated modestly Wednesday after comments from Federal Reserve Chair Janet Yellen implied that Fed policymakers are 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 impacted oil, gas and energy stocks. U.S. government bond prices also fell.
Media and entertainment stocks were pummeled after worrisome comments from media conglomerate Time Warner.
The Dow Jones industrial average lost 50.57 points, or 0.3 percent, to 17,867.58. The Standard & Poor's 500 index fell 7.48 points, or 0.4 percent, to 2,102.31 and the Nasdaq composite fell 2.65 points, or 0.1 percent, to 5,142.48.
During her regular semi-annual 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 has been made yet and 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 percent 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 percent chance of the Fed raising rates next month, according to data from the Chicago Mercantile Exchange.
"Everyone is so focused on the world's central banks at the moment they don't seem to care about anything else," said Colleen Supran with the San Francisco-based wealth management firm Bingham, Osborn & Scarborough.
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 percent.
One of the biggest victims of Yellen's comments, inadvertently, was oil and gas stocks. Yellen's comments cause the U.S. dollar to strengthen and oil prices to decline sharply.
Crude oil fell $1.58, or 3.3 percent, 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 percent, to $48.58 a barrel.
"Today's sell-off was easily definable by some hawkish comments out of (Yellen) suggestive of a rate hike next month," wrote Jim Ritterbusch, with the oil trading firm Ritterbusch & Associates, in a note.
Some of the biggest gainers on Monday and Tuesday were among the biggest decliners on Wednesday. Oilfield servicing company Baker Hughes fell $2.90, or 5.3 percent, to $51.56. Newfield Exploration lost $1.84, or 4.6 percent, to $38.30.
Media companies were another weak spot in the market. They fell sharply after Time Warner gave a worrisome earnings forecast for 2016. The company cited concerns about "cord-cutting," a phenomenon that's been increasing in recent years where long-time cable TV subscribers have cancelled or substantially curtailed their subscriptions, opting instead for cheaper services like HBO GO or Netflix.
Time Warner fell $5.10, or 6.6 percent, to $72.20, Viacom fell $3.37, or 6.6 percent, to $47.92 and Twenty-First Century Fox lost $1.63, or 5.2 percent, to $29.65.
Netflix gained $4.31, or 4 percent, to $114.05.
Bond prices fell, mostly as a result of Yellen's comments. The yield on the 10-year Treasury note rose to 2.22 percent from 2.21 percent the day before.
Precious and industrial metals futures closed lower. Gold fell $7.90 to $1,106.20 an ounce, silver lost 18 cents to $15.06 an ounce and copper edged down less than a penny to $2.32 a pound.
In the rest of the energy market, wholesale gasoline fell 5.4 cents to $1.392 a gallon in New York, heating oil fell 6.3 cents to $1.504 a gallon and natural gas rose 0.9 cents to $2.262 per 1,000 cubic feet.