Stocks rebounded late in the day after data showed US labour demand remained strong. But Fed officials insisted rates would stay high to battle inflation, a message the market has feared would lead to a hard landing and likely recession.

"By battling back, to me that is a favourable indicator that this rally could have legs," said Sam Stovall, chief investment strategist at CFRA Research in New York.

"It too confirms that investors believe, traders believe, that there's still more to go in this rally," he said.

US private employers stepped up hiring in September, the ADP National Employment report on Wednesday showed, suggesting rising rates and tighter financial conditions have yet to curb labour demand as the Fed battles high inflation.

The Institute for Supply Management's services industry employment gauge shot up in another sign labour remains strong as the overall industry slowed modestly in September.

The Fed is expected to deliver a fourth consecutive 75-basis-point rate hike when policymakers meet November 1-2, the pricing of fed fund futures shows, according to CME's FedWatch tool.

San Francisco Fed President Mary Daly told Bloomberg TV in an interview that inflation is problematic and that the US central bank would stay the course.

"The path is clear: we are going to raise rates to restrictive territory, then hold them there for a while," she said. "We are committed to bringing inflation down, staying course until we are well and truly done."

The benchmark S&P 500 index rose 5.7 per cent Monday and Tuesday as Treasury yields slid sharply on softer US economic data, the UK's turnaround on proposed tax cuts that roiled markets and Australia's smaller-than-expected rate hike.

Treasury yields shot up again on Wednesday after the economic data failed to bolster budding hopes the Fed might pivot to a less hawkish policy stance.

But the equity market was viewed as oversold and investors stepped in, Stovall said.

"Prices are basically saying we could be severely oversold and as a result, we should take advantage of it because we might be surprised down the road," he said.

According to preliminary data, the S&P 500 lost 9.81 points, or 0.20 per cent, to end at 3,783.65 points, while the Nasdaq Composite lost 30.59 points, or 0.27 per cent, to 11,145.81. The Dow Jones Industrial Average fell 58.24 points, or 0.14 per cent, to 30,258.08.

The energy sector led the market higher, followed by information technology and healthcare.

Energy sector jumped after the Organisation of the Petroleum Exporting Countries and allies agreed to cut oil production the deepest since the COVID-19 pandemic began, curbing supply in an already tight market.

Twitter Inc lost momentum in line with its peers, a day after surging 22 per cent on billionaire Elon Musk's decision to proceed with his original $US44 billion ($A68 billion) bid to take the social media company private.

Twitter fell and Tesla Inc, the electric-car maker headed by Musk, also slid.

Exxon Mobil Corp, Apple Inc and Microsoft Corp led the market higher. (Reporting by Ankika Biswas and Bansari Mayur Kamdar in Bengaluru; Editing by Arun Koyyur and Richard Chang)

Australian Associated Press