NEW YORK, Sept 6 — Wall Street’s three major averages closed lower yesterday with the Dow leading declines as Treasury yields rose along with oil prices and investors assessed prospects for the Federal Reserve’s interest rate path.

While all three main US stock indexes had logged gains in the previous week on hopes for a less hawkish Fed, that sentiment had faded by Monday.

US Treasury yields rose after economic data showed resilience and Fed Governor Christopher Waller said it suggests that the central bank need not change rates any time soon.

"Part of the reason stocks are struggling to make headway is that interest rates are continuing to rise and provide a good alternative to stocks,” said Paul Nolte, market strategist, Murphy & Sylvest Wealth Management, Elmhurst, Illinois.

With US crude oil prices rallying yesterday, Nolte also cited recent strength in oil prices as a damper to the Fed’s efforts to push inflation back to 2 per cent.

"Everybody has been expecting the Fed to step aside or start cutting rates. That might not be the case,” he said.

Traders’ bets that the Fed will leave rates unchanged at its September policy meeting stood at 93 per cent, while they priced in a roughly 54 per cent chance of a pause in November, the CME Group’s FedWatch tool showed.

Along with relatively light trading volume a day after Monday’s Labour Day holiday, Sam Stovall, chief investment strategist at CFRA Research, also noted that the Fed will have to look at upcoming data such as August’s inflation readings before making a rate decision later this month.

"The market’s not sure which way it wants to turn,” he said.

The Dow Jones Industrial Average fell 195.74 points, or 0.56 per cent, to 34,641.97, the S&P 500 lost 18.94 points, or 0.42 per cent, at 4,496.83 and the Nasdaq Composite dropped 10.86 points, or 0.08 per cent, to 14,020.95.

Among the S&P’s 11 major sectors, energy was the biggest gainer, closing up 0.5 per cent after hitting a roughly seven-month high. Saudi Arabia and Russia earlier announced a fresh extension to their voluntary supply cuts.

The economically sensitive materials sector and industrials were weak throughout the session with respective declines of 1.8 per cent and 1.7 per cent. Interest rate sensitive utilities lost 1.5 per cent as the day’s third weakest S&P sector.

The Dow Jones Transport index finished off 2.2 per cent, weighed down by a slide in airline stocks as rising oil prices implied higher fuel costs. The S&P 1500 airlines index finished down 2.4 per cent.

United Airlines closed off 2.5 per cent after falling as much as 4.7 per cent earlier in the day with a system-wide information technology issue forcing an hour-long aircraft ground stop.

China’s services activity expanded at its slowest pace in eight months in August, a private sector survey showed earlier.

Data yesterday showed orders for US factory goods declined 2.1 per cent in July, ending a four-month streak of gains.

On the bright side, Goldman Sachs lowered its estimate for the chance of a US recession in the next 12 months to 15 per cent from 20 per cent.

Shares of Airbnb rallied 7 per cent while Blackstone added 3.6 per cent on news that their stocks would join the S&P 500 index. Oracle shares rose 2.5 per cent after Barclays upgraded the software company to "overweight” from "equal weight.”

Declining issues outnumbered advancers on the NYSE by a 3.31-to-1 ratio; on Nasdaq, a 2.28-to-1 ratio favoured decliners.

The S&P 500 posted 12 new 52-week highs and 25 new lows; the Nasdaq Composite recorded 50 new highs and 142 new lows.

On US exchanges, 9.54 billion shares changed hands compared with the 10.26 billion moving average for the last 20 sessions. — Reuters