Stocks slip as rate hike fears set in

The three major stock benchmarks lost 0.3% apiece Wednesday as Wall Street struggled to shake off worries about a potential Fed rate hike in December.

The Dow Jones industrial average ended down 56 points, the Standard & Poor's 500 index dropped 7 and the Nasdaq shed 16.

Energy stocks were the biggest losers as oil prices fell after the American Petroleum Institute said supplies grew by a larger-than-expected 6.3 million barrels. U.S. benchmark crude fell about 3% to $42.84 a barrel.

Fed's Williams says 'very strong case' to raise rates next month

Investors are grappling with the growing consensus that the Federal Reserve will raise interest rates at its next meeting for the first time in almost a decade. Rates have been near zero since the 2008 financial crisis.

San Francisco Federal Reserve President John Williams said Tuesday there's a "very strong case" for the Fed to raise interest rates next month if the economy continues to improve and policymakers are confident that inflation will pick up.

"Assuming the data are consistent with those (conditions), I think there's a very strong case for starting the process of raising interest rates" at the Fed's Dec. 15-16 meeting, Williams said in an exclusive interview with USA TODAY. "The next natural step . . . is to start raising rates and to do that gradually."

Global stocks were slightly up as investors focused on key economic indicators from China.  Investors were watching the latest indicators from China, which showed industrial output grew 5.6% in October compared to a year ago, down from 5.7% in September. Retail sales grew 11% in October, slightly higher than 10.9% for September.

Japan’s Nikkei 225 index gained 0.1% while Hong Kong’s Hang Seng index lost 0.2%. The Shanghai composite index gained 0.3%.

European shares were higher Wednesday. London's FTSE 100 was up 0.55 and Germany's DAX index added 0.6%.

U.S. stocks ended mixed overall Tuesday as investors paused after a big stock rally due to concerns about slowing global growth, a coming rate hike and high valuations.

Contributing: USA TODAY's Paul Davidson, Associated Press

Jane Onyanga-Omara on Twitter: @janeomara.