Stocks drop, oil sinks below $40 a barrel

U.S. stocks dropped as oil prices plunged below $40 a barrel, bringing down energy producers along with it.

According to Bloomberg News, treasuries declined after Federal Reserve Head Janet Yellen's statement on her increasing confidence in the economy. This comes as central bank officials are scheduled to meet two weeks later to decide on the possible interest rate hike.

"Yellen's remarks appear to be reinforcing market expectations of liftoff," said Atlanta-based Ridgeworth Investments senior strategist Alan Gayle. "The Fed's actions combined with the ECB (European Central Bank) is already taking the the dollar higher, and it's taking it higher today. This will weigh on the large-cap space."

The Wall Street Journal wrote equities were lower the whole day Wednesday. The selloff accelerated by 1:30 p.m. New York time. One of the major reasons was the crude oil selloff. Meanwhile, Comex crude oil was under pressure the whole day of trading. In the afternoon, it went below $40 a barrel.

The U.S. News reported that the Dow Jones industrial average went down 158.67 points, which is a 0.9 percent to 17,729.68. Meanwhile, the Standard & Poor's 500 index also decreased 23.12 points, which is a 1.1 percent decline to 2,079.51, and the Nasdaq composite dropped 33.08 points, which is a 0.6 percent loss to 5,123.22.

Oil and gas stock plunged lower than any other commodities in the market, while S&P 500 energy stocks went down by 3.1 percent and 1.1 percent in the broader market. Prices of oil went further down in the afternoon after reports from the Energy Department shows an increase in U.S. crude oil by 1.2 million barrels in the prior week. Analysts initially expected a decline in inventory.

Meanwhile benchmark U.S. crude declined by 4.6 percent to $39.94 per barrel on the New York Mercantile Exchange. Brent crude also went down $1.95, or 4.4 percent, to $42.49 per barrel in London.