* Indexes reverse course after higher open
* Pandora soars after comments on new music royalties
* FedEx rises after Q3 profit beats view
* Indexes down: Dow 0.65 pct, S&P 0.81 pct, Nasdaq 0.59 pct (Adds details, changes comment, updates prices)
By Abhiram Nandakumar
Dec 17 (Reuters) - Wall Street looked set to snap a three-day rally on Thursday, dragged down by energy and materials stocks, a day after the Federal Reserve raised interest rates for the first time in nine years.
Crude oil prices resumed their slide after gaining earlier in the day on persistent oversupply worries and after the dollar hit a two-week high.
The central bank 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.
Global stocks surged on Fed Chair Janet Yellen's assurance that further tightening would be gradual and heavily dependent on inflation, which remained firmly below the central bank's 2 percent target.
"The markets have reversed from a higher opening, but that was to be expected after yesterday's surge," said Peter Cardillo, chief market economist at First Standard Financial in New York.
At 11:02 a.m. ET (1602 GMT), the Dow Jones industrial average was down 115.28 points, or 0.65 percent, at 17,633.81, the S&P 500 was down 16.71 points, or 0.81 percent, at 2,056.36 and the Nasdaq Composite index was down 29.91 points, or 0.59 percent, at 5,041.23.
All 10 major S&P sectors were lower, with the energy sector's 1.6 percent fall leading the decliners. Conocophilips was down 4 percent and was the biggest drag on the sector.
Exxon and Chevron were both down about 1 percent.
Newmont Mining was down 8 percent at $17.58 and was the biggest influence on the materials index's 1.25 percent decline.
General Mills was down 3.8 percent at $56.93 after its quarterly sales missed estimates.
Oracle was down 4.3 percent at $37.26 after its third-quarter profit forecast failed to impress investors.
Pandora was up 11.6 percent at $15 after the media-streaming company said new music royalty rates were "balanced".
FedEx was up 2.9 percent at $153.10 after it reported a better-than-expected quarterly profit.
Investors will now keep a weather eye on data to gauge the economy's capacity to withstand higher rates.
Data showed jobless claims fell to 271,000 last week, below 275,000 estimated, while third-quarter current account deficit expanded to $124.1 billion, the largest shortfall since the fourth quarter of 2008.
Declining issues outnumbered advancing ones on the NYSE by 1,841 to 1,098. On the Nasdaq, 1,530 issues fell and 1,119 fell.
The S&P 500 index showed 10 new 52-week highs and 11 new lows, while the Nasdaq recorded 38 new highs and 53 new lows. (Reporting by Abhiram Nandakumar in Bengaluru; Editing by Anil D'Silva)