By Caroline Valetkevitch
(Reuters) - U.S. stocks edged lower on Wednesday, retracing recent gains along with energy shares, while comments by Federal Reserve Chair Janet Yellen pointing to a possible interest rate hike in December added to investor caution.
S&P energy <.SPNY>, down 1.0 percent, led the day's decline as U.S. crude oil closed down 3.3 percent. The fall snapped a run of five straight days of gains in the energy index.
Stocks added to losses after comments by Yellen, who told Congress the Fed expects the economy to continue to grow at a pace that returns inflation to policy-makers' target and that "if the incoming information supports that expectation ... December would be a live possibility" for a rate increase.
Still, S&P utilities <.SPLRCU>, which tend to fall in a higher-rate environment, were up 0.4 percent, making it the day's best-performing sector.
The market is consolidating after a big rally, said Michael O'Rourke, chief market strategist at JonesTrading in Greenwich, Connecticut. "The gains have been strong over the past five weeks, and we're due for more of a breather here," he said.
The Dow Jones industrial average (DJI) fell 50.57 points, or 0.28 percent, to 17,867.58; the S&P 500 (SPX) lost 7.48 points, or 0.35 percent, to 2,102.31; and the Nasdaq Composite (IXIC) dropped 2.65 points, or 0.05 percent, to 5,142.48.
On Friday, Wall Street registered its strongest monthly performance in four years and posted a fifth straight week of gains.
Stocks rallied after the Fed's statement last week, when it signaled a December rate hike was still on the table, yet the ongoing debate over when the Fed will make its move has added to investor uncertainty.
"It's really that uncertainty - investors don't know whether to applaud a rate hike or to fear it," said Bruce Zaro, chief technical strategist at Bolton Global Asset Management in Boston.
A raft of data on Wednesday, including a report showing U.S. private employers maintained a steady pace of hiring in October, suggested the economy was strong enough to support ending an era of near-zero interest rates.
Time Warner (N:TWX), down 6.6 percent at $72.20, weighed on the S&P 500 the most after the company said ratings for its "key" domestic entertainment networks have dropped more than anticipated. Shares of Twenty-First Century Fox Inc (O:FOXA) dropped 5.2 percent to $29.65 after it reported lower-than-expected quarterly revenue.
Other media stocks, such as Walt Disney Co (N:DIS), also fell.
U.S. health insurers also slid, with UnitedHealth (N:UNH) down 2.6 percent at $114.64, the biggest drag on the Dow after WellCare Health Plans Inc (N:WCG) announced that its new Iowa Medicaid contract will be net unprofitable over its three-year contract life. WellCare shares dropped 9.1 percent to $81.11.
After the bell, shares of Facebook (O:FB) hit an all-time high of $109.34 following its earnings report, before paring gains to about 4 percent at $108.00. Whole Foods Market (O:WFM) shares dropped 7.2 percent to $28.55, also after its results.
Declining issues outnumbered advancing ones on the NYSE by 1,849 to 1,214, while on the Nasdaq, 1,398 issues fell and 1,362 advanced. The S&P 500 posted 16 new 52-week highs and one new low; the Nasdaq recorded 69 new highs and 43 new lows.
About 7.4 billion shares changed hands on U.S. exchanges, compared with the 7.0 billion daily average for the past 20 trading days, according to Thomson Reuters data.