Wall Street pulls back as Fed rally reverses

By Rodrigo Campos

NEW YORK (Reuters) - U.S. stocks fell on Thursday as a stronger dollar weighed on oil and other commodity prices, with energy and materials sectors shares leading the market lower.

The greenback rose after a sharp decline on Wednesday, reversing the trades that took markets higher after the Federal Reserve appeared to be more dovish than expected even as it opened the door for a Fed Funds rate hike as soon as in June.

U.S. stocks had rallied more than 1 percent on Wednesday after the Fed statement.

WTI crude and Brent fell more than 3 percent on the dollar strength and concerns over excess supply and the S&P 500 energy index <.SPNY> fell 1.6 percent as the worst performing of the 10 major S&P 500 sectors.

"The forward path in interest rates is going to be slower than previously expected. The market celebrated that yesterday, and now it's wondering what comes next," said Kevin Caron, market strategist at Stifel, Nicolaus & Co in Florham Park, New Jersey.

"The economy seems to be doing better and that could be providing some support for the dollar," he said, noting the Fed's tightening path was not the only tailwind for the U.S. currency.

At 2:08 p.m., the Dow Jones industrial average fell 107.09 points, or 0.59 percent, to 17,969.1, the S&P 500 lost 9.59 points, or 0.46 percent, to 2,089.91 and the Nasdaq Composite added 10.97 points, or 0.22 percent, to 4,993.80.

Biotech stocks helped buoy the Nasdaq Composite. Biogen jumped 2.3 percent to $437.58 after Credit Suisse upped its price target on the stock to $500 from $400. The Nasdaq biotech index <.NBI> rose 1.7 percent.

Guess Inc shares surged 15.7 percent to $19.37 after quarterly profit beat analyst estimates as the apparel retailer's expenses declined and online business grew. [IDnL3N0WK5HU]

Initial jobless claims rose marginally last week, indicating the labor market remained on solid footing. Growth has slowed in the first quarter, hurt in part by a harsh winter and a strong dollar, but most analysts see a positive outlook for the second quarter.

Declining issues outnumbered advancing ones on the NYSE by 2,039 to 984, for a 2.07-to-1 ratio; on the Nasdaq, 1,357 issues rose and 1,339 fell for a 1.01-to-1 ratio favoring advancers.

The S&P 500 index was posting 34 new 52-week highs and 3 new lows; the Nasdaq Composite was recording 129 new highs and 22 new lows.

(Editing by Chizu Nomiyama and Nick Zieminski)