US stocks fell last night on worries that rising interest rates could put a damper on consumer and business spending, but stocks pared losses late in the session on a bond-market rebound.<br /><br />The market had extended losses after a 10-year Treasury note auction sparked a sell-off in bonds, pushing yields briefly above 4 per cent for the first time since October. Stocks recovered from the sell-off after the bond market rebounded, with the yield at 3.9455 per cent.<br /><br />Investors are worried that higher yields, which act as a benchmark for many lending rates, could handcuff an economic recovery.<br /><br />Interest rate-sensitive stocks, such as housebuilders and financials, were among the primary laggards, with the Dow Jones US Home Construction index off 1.5 per cent and the S&P Financial index down 1.6 per cent.<br /><br />“Rising interest rates are a headwind for the market,” said Todd Salamone, vice president of research at Schaeffer’s Investment Research in Cincinnati.<br /><br />The Dow Jones industrial average fell 24.04 points, or 0.27 per cent, to 8,739.02. The Standard & Poor’s 500 index slid 3.28 points, or 0.35 per cent, to 939.15. The Nasdaq Composite index dropped 7.05 points, or 0.38 per cent, to 1,853.08.<br /><br />In its latest Beige Book survey of the economy, the Federal Reserve said US economic conditions were weak or worsened through May, but some areas of the country saw signs the contraction was moderating. <br /><br />US crude oil futures rose to their highest level in seven months at over $71 a barrel, lifting energy companies. <strong>ExxonMobil</strong> rose 1 per cent to $73.84 and was the top boost to the Dow. The PHLX Oil Service Sector index gained 1.4 per cent. While gains in oil and other commodities had earlier supported stocks globally on hopes economic activity was quickening, US investors worried that higher prices would fuel inflation and dent an economic recovery.<br /><br />Trading was low on the New York Stock Exchange, with about 1.22bn shares changing hands, below last year’s estimated daily average of 1.49bn, while on Nasdaq, about 2.35bn shares traded, above last year’s daily average of 2.28bn.