Wall Street falls as energy, materials stocks drag

The selloff was broad based with all 10 major S&P sectors in the red and only 5 of the 30 Dow components were higher.

US stocks were lower on Thursday morning as materials and energy stocks sank due to lower commodity prices and investors weighed the prospect of an increase in interest rates next month.

The selloff was broad based with all 10 major S&P sectors in the red and only 5 of the 30 Dow components were higher.

Fed Chair Janet Yellen said that the central bank must weigh the effects of post-crisis financial regulations and new channels through which policy affects markets as it prepares to raise interest rates. She did not comment on the rate hike timing or the U.S. economy.

St. Louis Fed President James Bullard, who is ready to raise U.S. rates, said the United States and other countries may be entering an era of permanently low rates and inflation that will require a rethink of monetary policy.

Earlier Thursday, data showed weekly U.S. jobless claims held steady at levels consistent with sustained labor market strength that could encourage the Fed to raise rates next month.

New York Fed President William Dudley and Fed Vice Chair Stanley Fischer are scheduled to speak later in the day.

The Fed has maintained that it is likely to pull the trigger next month if data supports its view that the economy was strong enough to withstand higher rates.

In contrast, European Central Bank President Mario Draghi hinted on Thursday that the bank could extend stimulus programs at its policy meeting next month as inflation dynamics had somewhat weakened.

At 9:40 a.m. ET (1440 GMT), the Dow Jones industrial average was down 144.71 points, or 0.82 percent, at 17,557.51.

The S&P 500 was down 13.53 points, or 0.65 percent, at 2,061.47 and the Nasdaq Composite index was down 30.06 points, or 0.59 percent, at 5,036.96.

The material sector was down 1.5 percent as commodities prices fell and the energy sector declined 1.2 percent as crude oil prices slipped.

Retailers got a boost on Thursday after Kohl's reported better-than-expected quarterly net sales.

Kohl's shares were up 7 percent at $46.19, while J.C. Penney was up about 2.5 percent. Nordstrom, which was up 2.8 percent, is set to report results after the close.

Advanced Auto Parts dropped 10.4 percent to $174.50 after it reported quarterly profit below estimates.

Viacom was up 3.3 percent at $51 after quarterly ad sales at its key U.S. cable TV business fell less than expected.

PayPal's shares slid 3.1 percent to $35.22 after the Wall Street Journal reported Apple was in talks with U.S. banks to develop a rival payment service.

Declining issues outnumbered advancing ones on the NYSE by 2,234 to 498. On the Nasdaq, 1,823 issues fell and 478 advanced.

The S&P 500 index showed no new 52-week highs and 11 new lows, while the Nasdaq recorded 7 new highs and 66 new lows.