Wall St drops as investor jitters climb before CPI data Friday

© Reuters. FILE PHOTO: A trader works on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., June 7, 2022. REUTERS/Brendan McDermid

By Caroline Valetkevitch

NEW YORK (Reuters) - U.S. stocks sold off sharply Thursday as investor anxiety heightened ahead of data on Friday that is expected to show consumer prices remained elevated in May.

Selling picked up toward the end of the session. Mega-cap growth stocks led the drop, with Apple Inc (NASDAQ:AAPL) and Amazon.com Inc (NASDAQ:AMZN) falling 3.6% and 4.2%, respectively, and putting the most pressure on the S&P 500 and the Nasdaq.

Communication services and technology had the biggest declines among sectors, although all 11 S&P 500 sectors ended lower on the day.

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 weighed on sentiment before Friday's U.S. consumer price index report.

"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."

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.

The Dow Jones Industrial Average fell 638.11 points, or 1.94%, to 32,272.79; the S&P 500 lost 97.95 points, or 2.38%, to 4,017.82; and the Nasdaq Composite dropped 332.05 points, or 2.75%, to 11,754.23.

All three of the major indexes registered their biggest daily percentage declines since mid-May. The S&P 500 is down 15.7% for the year so far and the Nasdaq is down about 25%.

Higher-than-expected inflation readings could increase fears that the U.S. Federal Reserve will raise interest rates more aggressively than previously expected.

The 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 (NYSE:BABA) Group shares slid 8.1% after its affiliate Ant Group said it has no plan to initiate an initial public offering.

Declining issues outnumbered advancing ones on the NYSE by a 5.51-to-1 ratio; on Nasdaq, a 2.79-to-1 ratio favored decliners.

The S&P 500 posted one new 52-week high and 31 new lows; the Nasdaq Composite recorded 18 new highs and 127 new lows.

Volume on U.S. exchanges was 11.50 billion shares, compared with the 12.07 billion-share average for the full session over the last 20 trading days.