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Wall St ends sharply lower, with investors on edge before CPI data Friday

U.S. stocks ended sharply lower on Thursday in a broad decline led by Nasdaq as investors grew cautious ahead of data on Friday that is expected to show consumer prices remained high in May.


All 11 of the S&P 500 sectors were in negative territory, with the communication services sector (.SPLRCL) down the most.


Adding to nervousness, the benchmark U.S. 10-year Treasury yield climbed to as much as 3.073%, its highest level since May 11.


Recent sharp gains in oil prices also kept investors on edge before Friday’s U.S. consumer price index report.


The data is expected to show that consumer prices rose 0.7% in May, while the core consumer price index (CPI), which excludes the volatile food and energy sectors, rose 0.5% in the month.


“We’re getting prepared for what the news might be regarding inflation tomorrow,” said Peter Tuz, president of Chase Investment Counsel in Charlottesville, Virginia.


“I view it as mixed. If the total is high and the core number shows some sort of drop, I actually think the markets could rally on that because it’ll show that things are kind of rolling over a bit.”


According to preliminary data, the S&P 500 (.SPX) lost 98.07 points, or 2.38%, to end at 4,017.70 points, while the Nasdaq Composite (.IXIC) lost 332.49 points, or 2.75%, to 11,753.78. The Dow Jones Industrial Average (.DJI) fell 640.45 points, or 1.95%, to 32,270.45.


Investors have worried that rising inflation could keep the Federal Reserve on an aggressive path in hiking interest rates.


The U.S. central bank has raised its short-term interest rate by three-quarters of a percentage point this year and intends to keep at it with 50 basis points increases at its meeting next week and again in July.


Alibaba Group slid after its affiliate Ant Group said it has no plan to initiate an initial public offering.


The Philadelphia Semiconductor Index jumped 3%.


Federal Reserve Vice Chairman Lyle Brainard said she supports raising interest rates by at least half a percent, and US stocks tumbled after seeing little case for stopping price hikes in September.


The US stock market has corrected modestly in recent weeks, with investors debating whether the worst selloff that dominated Wall Street could end in 2022.


“Volatility has become the norm, not the exception,” said Terry Sandven, chief equity strategist at US Bank Wealth Management in Minneapolis, Minnesota. Stocks are being held hostage by inflation, and until inflation is brought under control, volatility remains the same. More likely to stay.”


The S&P 500 is now down about 13% from its record high in early January.


The ADP National Employment Report showed US private payrolls grew much less than expected in May, suggesting that demand for labor was beginning to slow amid higher interest rates and tighter financial conditions.


All eyes are now on government non-farm payrolls data on Friday, with investors looking for new signs of the health of the US economy and how aggressively the Fed may continue to raise interest rates. Analysts expect the economy to have added 325,000 jobs in the past month.


The S&P 500 was up 1.36% at 4,157.19 in afternoon trading.


The Nasdaq rose 2.38% to 12,280.47, while the Dow Jones Industrial Average rose 0.79% to 33,070.92.


Microsoft gained 0.1% even after the software maker cut its fourth-quarter forecast for profit and revenue, making it the latest US company to warn of a hit from a stronger US dollar.


Hewlett Packard Enterprise Co fell 6.5% after the technology firm delivered a disappointing full-year forecast due to currency headwinds and an exit from Russia.


Ford Motor Company rose 2.2% when the automaker said it plans to invest $3.7 billion in assembly plants in Michigan, Ohio and Missouri.


In the US stock market, the number of declining stocks increased by a 3.2-to-one ratio.


S&P 500 records new highs and 29 new lows; The Nasdaq recorded 28 new highs and 95 new lows. (Reporting by Anisha Sarkar and Devik Jain in Bengaluru, and Noel Randevich in Oakland, California; Editing by Marguerita Choy)

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