Wall Street closed lower on Thursday as energy shares were weighed down by falling crude prices while US treasury yields rose and gold prices fell as investors bet US jobs on Friday could help prompt an interest rate hike as soon as next month.

A day after Federal Reserve Chair Janet Yellen referred to December as a "live possibility" for a US rate hike, investors were waiting for Friday's key monthly nonfarm payrolls report to gauge if the data is strong enough to prompt a liftoff.

"This is a big piece of data as to what the Fed is looking for. If it shows up weak we may not get a rate hike," said Scott Colyer, chief executive officer of Advisors Asset Management in Monument, Colorado, adding that stocks could rise on a strong jobs number as it would be a good sign for the economy.

"I think everybody wants them to move or not move. The month-to-month stuff is killing everybody," he said as the market has been whipsawed all year by speculation on timing of a rate hike.

The Dow Jones industrial average fell 4.15 points, or 0.02 per cent, to 17,863.43, the S&P 500 lost 2.38 points, or 0.11 per cent, to 2,099.93 and the Nasdaq Composite dropped 14.74 points, or 0.29 per cent, to 5,127.74.

Weak oil prices weighed on energy and a slump in gold and copper dragged on the materials sector. Energy shares led the S&P decline with a 1 per cent drop. Interest-rate-sensitive utilities were the next weakest sector, followed by materials.

US two-year Treasury yields hit their highest in 4-1/2 years on Thursday on intensifying expectations for a December Fed liftoff, while long-dated yields also rose on fresh corporate supply.

"There is a fair amount of corporate issuance out there today, and that has been a big contributor to the price action," said Ian Lyngen, senior government bond strategist at CRT Capital in Stamford, Connecticut.

The dollar rose against most major currencies, hitting a more than two-month high versus the yen on bets for a rate hike. The dollar index, measuring the greenback against a basket of major currencies, rose 0.04 per cent.

Thursday's data showed that the United States last week had its biggest rise in jobless claims in eight months, while third-quarter productivity gained after a drop in self-employment caused overall hours worked to fall for the first time in six years, restraining costs.

Gold and Copper were both weighed down by the prospect of a December rate hike. Gold fell as low as $1,102.35 an ounce to its weakest since September 15 in its seventh straight session of declines.

The Philadelphia SE Gold/Silver index was down 4.5 per cent and copper fell 2.4 per cent, hitting its lowest since September 11.

Oil futures extended the previous session's rout, as an oversupply of crude and weak gasoline prices continued to weigh. U.S. crude futures settled down 2.4 per cent at $45.20 a barrel and Brent crude settled down 1.2 per cent at $47.98.

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