US STOCKS-Energy and materials drag Wall St lower after a 3-day rally

* Crude resumes slide

* Apple (LSE: 0R2V.L - news) drags down markets

* Pandora (Xetra: 3P7.DE - news) soars after comments on new music royalties

* FedEx (Swiss: FDX.SW - news) rises after 3rd-quarterprofit beats view

* Indexes down: Dow 0.97 pct, S&P 0.99 pct, Nasdaq (NasdaqGS: NDAQ - news) 0.82 pct (Updates to late afternoon, adds details, changes byline)

By Marcus E. Howard

Dec (Shanghai: 600875.SS - news) 17 (Reuters) - U.S (Other OTC: UBGXF - news) . stocks fell on Thursday following three days of gains as energy and materials shares tracked declines in prices of crude oil and metals.

Crude oil prices resumed their slide after gaining earlier in the day, on persistent oversupply worries and as the dollar hit a two-week high.

U.S. crude fell as much as 2.5 percent and traded below $35 a barrel while Brent traded near a seven-year low hit earlier this week.

Dow components Exxon and Chevron (Swiss: CVX.SW - news) were down, 1.5 percent and 2.2 percent, respectively.

Newmont Mining (Swiss: NEM.SW - news) led declines on the materials index , falling 7.3 percent to $17.67.

"I think what we're going to see through the end of the year is a refocus on oil and commodities," said Karen Hiatt, senior portfolio manager at Allianz Global Investors in San Francisco.

"The market is still continuing to want to migrate toward more defensive, more visible earnings-type companies or sectors."

At 2:58 p.m. the Dow Jones industrial average fell 171.54 points, or 0.97 percent, to 17,577.55, the S&P 500 lost 20.58 points, or 0.99 percent, to 2,052.49, and the Nasdaq Composite dropped 41.60 points, or 0.82 percent, to 5,029.53.

The previous three days of gains included Wednesday's rally after the Federal Reserve raised its benchmark rate by 25 basis points to between 0.25 percent and 0.50 percent, signaling confidence in the strength of the world's largest economy.

While the Fed's decision took some uncertainty out of the market, Hiatt said that volatility, historically, tends to rise after a Fed rate hike.

Fed Chair Janet Yellen's assurance that further tightening would be gradual boosted stocks on Wednesday. However, investors remain concerned about weak global economic conditions as the slide in commodity markets continues unabated and demand slows.

"Investors continue to struggle with the notion of the strength in the U.S. economy, in the context of this performance within global conditions that are mixed at best," said Mark Luschini, chief investment strategist at Janney Montgomery Scott in Philadelphia.

The S&P utility index was up 0.6 percent on Thursday, bringing it to a gain of 4.5 percent so far this week.

Apple Inc, the most valuable U.S. company, was down 1.9 percent as concerns deepened on Wall Street about potential weakness in iPhone shipments and was the biggest drag on the S&P and the Nasdaq. IBM (NYSE: IBM - news) fell 1.7 percent and weighed on the Dow.

Pandora Media Inc (NYSE: P - news) was up 14.2 percent at $15.35 after the media-streaming company said new music royalty rates were "balanced."

FedEx was up 2.6 percent at $152.78 after it reported a better-than-expected quarterly profit.

Declining issues outnumbered advancing ones on the NYSE by 1,849 to 1,200, for a 1.54-to-1 ratio on the downside; on the Nasdaq, 1,706 issues fell and 1,100 advanced for a 1.55-to-1 ratio favoring decliners.

The S&P 500 posted 12 new 52-week highs and 22 new lows; the Nasdaq recorded 43 new highs and 87 new lows.

(Reporting by Marcus E. Howard; Additional reporting by Abhiram Nandakumar in Bengaluru; Editing by Anil D'Silva and Leslie Adler)