The Dow Jones industrial average fell 10.73 to 5,722.74. The blue-chip average had shrugged off some early weakness to post a 5-point gain in the morning, but the tug of a worsening bond market proved too strong.
Decliners outnumbered advancers by a 5-to-4 margin on the New York Stock Exchange, with 1,013 up, 1,284 down and 889 unchanged.
NYSE volume totaled 308.01 million shares, vs. 354.49 million yesterday. The NYSE's composite index fell 1.49 to 357.23; and the Standard & Poor's 500-stock index fell 3.65 at 667.03.
The Nasdaq composite index fell 0.93 to 1,143.03, and the American Stock Exchange fell 0.23 to 560.09.
Stocks followed bonds lower after the Commerce Department reported that orders to U.S. factories for big-ticket durable goods rose 1.6 percent to $172.7 billion in July, the second advance in three months. Many analysts had expected a tamer 0.5 percent gain.
As bond prices fell, the yield on the 30-year Treasury bond - a key determinant of corporate and consumer borrowing costs - jumped from late yesterday's 6.84 percent to 6.92 percent, its highest level since late July.
Although it did not act this week, the Fed could push rates higher at the next policy meeting on Sept. 24 if today's report is followed by a series of similarly strong economic readings.