New York, Oct 2 (IANS): US stocks closed lower after a US manufacturing survey showed the worst reading in a decade.

The Dow Jones Industrial Average fell 343.79 points, or 1.28 per cent, to 26,573.04 on Tuesday. The S&P 500 decreased 36.49 points, or 1.23 per cent, to 2,940.25. The Nasdaq Composite Index went down 90.65 points, or 1.13 per cent, to 7,908.69, Xinhua reported.

A gauge of US manufacturing from the Institute for Supply Management (ISM) showed that the sector contracted in September.

The U.S. manufacturing PMI (Purchasing Managers' Index) registered 47.8 per cent, the lowest since June 2009, marking the second consecutive month of contraction, according to the Manufacturing ISM Report On Business released on Tuesday.

The reading is down 1.3 percentage points from the August reading of 49.1 per cent, the report said. Any reading below 50 percent signals a contraction.

Timothy Fiore, chair of the ISM Manufacturing Business Survey Committee, said in a statement that comments from the panel reflect a continuing decrease in business confidence.

"Overall, sentiment this month remains cautious regarding near-term growth," said Fiore.