U.S. stocks closed lower Wednesday as falling oil prices, worries about slowing growth and North Korea’s claim to have completed its fourth successful nuclear test weighed on global markets.
Shares extended their decline after the release of minutes from the December Federal Reserve meeting, which showed some policy makers had reservations about raising interest rates.
The Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA -0.03% finished down 252.15 points, or 1.3%, at 16,906.51 — its first close below 17,000 since October. The S&P 500 index slid 26.45 points, or 1.3%, to 1,990.26, its first close below 2,000 since mid-October. All of the S&P 500’s 10 sectors finished in negative territory.
Meanwhile, The Nasdaq Composite Index was down 55.67 points, or 1.1%, to 4,835.76.
Despite a spate of U.S. data, the minutes and remarks by Fed Vice Chairman Stanley Fischer, investors remained fixed on the global issues that have loomed large over the market so far this year.
“The year is three days old, and we’ve already gotten two new things -- and one old thing -- to worry about,” said Steve Chiavarone, associate portfolio manager at Federated Investors, referring to rising tensions between Iran and Saudi Arabia, reports of a nuclear test in North Korea and signs of economic sluggishness in China.
The Fed minutes showed that some members had doubts about raising rates because inflation showed few signs of rising. Stocks initially maintained losses after the minutes, but then extended their slide.
Chiavarone said the policy makers’ doubts were understandable.
“When you’re moving off the zero line, you really don’t want to have to go back to zero,” he said.
Earlier Wednesday, North Korea announced that it had successfully detonated a hydrogen bomb after monitors detected seismic activity near the country’s northeastern coast. A U.S. analysis, however, indicated that the explosion wasn’t caused by a hydrogen bomb, The Wall Street Journal reported.
On the bright side, U.S. data continues to improve, which Chiavarone said should help market participants see that the U.S. economy is resilient enough to withstand these international pressures.
North Korea announces successful hydrogen bomb test
North Korean state media announced that the country carried out a successful test of a thermonuclear weapon on Wednesday. A few hours earlier, an earthquake was recorded near the site of previous North Korean nuclear tests.
Data: A report from Automatic Data Processing Inc. revealed that December had the strongest gain in private-sector employment of the entire year.
Employers added 257,000 jobs in December, according to the data. The data is a widely watched indicator of job-market health, and usually precedes that month’s nonfarm payrolls report by a couple of days. Economists polled by MarketWatch expect Friday’s nonfarm payrolls report to show that 215,000 new jobs were added.
In the latest batch of Chinese data, the purchasing-managers index for the country’s services sector dropped to a 17-month low in December. Markets in Asia fell in response, with the Hang Seng Index /zigman2/quotes/210598030/delayed HK:HSI -1.52% and the Nikkei 225 closing lower.