Wall Street's main indexes fell on Tuesday as a stronger-than-expected reading on services sector activity fed into expectations that the Federal Reserve will keep raising interest rates to bring down surging inflation.

The tech-heavy Nasdaq was set for its seventh consecutive day of losses in what could be the longest such losing streak since November 2016.

Rate-sensitive shares of Apple, Amazon.com Inc and Microsoft Corp fell over 1% each as benchmark U.S. Treasury yields rose to their highest levels since June. [US/]

A survey from the Institute for Supply Management (ISM) showed the U.S. services industry picked up in August for the second straight month amid stronger order growth and employment, while supply bottlenecks and price pressures eased. [nN9N2WB02O}

The ISM non-manufacturing PMI edged up to a reading of 56.9 last month, beating economists' expectations of 54.9, as per a Reuters poll.

"The primary concern by far, for almost everyone, is really just what's going to happen with the Fed and interest rates," said Randy Frederick, vice president of trading and derivatives for Charles Schwab in Austin, Texas.

"While the Fed's definitely going to keep hiking its interest rates, I think there's zero question about that. The only question is how much and how fast."

Traders see over 70% chance of a third 75-basis-point rate hike at the Fed's policy meeting later this month.

Data last week signaled resilience in U.S. manufacturing activity and the labor market, suggesting the Fed would need to keep raising interest rates in the coming months.

U.S. consumer prices data next week now could influence expectations on monetary policy before the Fed's next meeting in September.

Markets started September on a weak note as hawkish comments from Fed policymakers and data signaling momentum in the U.S. economy raised fears of aggressive interest rate hikes to cool inflation.

The benchmark S&P 500 closed at a six-week low on Friday as worries about the European gas crisis overshadowed relief from the monthly jobs data which pointed a slight easing of wage pressures.

The index is down nearly 18% so far this year while the Nasdaq has shed nearly 26% as rising interest rates hurt megacap technology and growth stocks.

Among the major S&P sectors, consumer discretionary, communication services and energy stocks fell the most while utilities held steady.

The Philadelphia SE Semiconductor index fell 1.4% for a seventh day running.

At 10:38 a.m. ET, the Dow Jones Industrial Average was down 153.51 points, or 0.49%, at 31,164.93, the S&P 500 was down 21.33 points, or 0.54%, at 3,902.93, and the Nasdaq Composite was down 117.20 points, or 1.01%, at 11,513.66.

The CBOE Volatility index, also known as Wall Street's fear gauge, rose to 27.1 points.

Bed Bath & Beyond Inc fell 14.8% after Chief Financial Officer Gustavo Arnal fell to his death from New York's Tribeca skyscraper.

Digital World Acquisition Corp tumbled 19.9% after Reuters reported the blank-check acquisition firm that agreed to merge with Donald Trump's social media company failed to secure enough shareholder support for an extension to complete the deal.

Declining issues outnumbered advancers for a 2.53-to-1 ratio on the NYSE and 2.40-to-1 ratio on the Nasdaq.

The S&P index recorded no new 52-week highs and 21 new lows, while the Nasdaq recorded 15 new highs and 218 new lows.