Wall St Falls As Growth Stocks Struggle With Inflation Reading In Focus

Wall Street's main indexes fell in choppy trading on Thursday, as growth and bank stocks slipped amid weaker risk appetite ahead of a closely watched inflation report this week.

Nine of the 11 major S&P sectors traded lower, with energy, financials and materials down 1% each. Consumer staples and consumer discretionary sectors edged higher.

Apple Inc and Amazon.com declined 1%, dragging the S&P 500 and the Nasdaq indexes lower. Bank of America tumbled 2.5%, while the broader banks index shed 1.7%.

Rate-sensitive growth stocks are under pressure as the benchmark U.S. 10-year Treasury yield climbed to as much as 3.07%, its highest level since May 11.

Inflation worries came to the fore ahead of the U.S. consumer price index (CPI) report on Friday as Brent crude prices rose above $123 a barrel.

"There is a straight line read from higher prices at the pump for the U.S. consumer to higher U.S. inflation," said Huw Roberts, head of analytics at Quant Insight.

"The hope was that Friday's CPI report would be ammunition for the peak inflation argument and the crude oil move is upsetting that."

Consumer prices are expected to have risen 0.7% in May, while the core consumer price index, which excludes the volatile food and energy sectors, rose 0.5% in the month.

Investors fear a hot reading on inflation could keep the U.S. Federal Reserve on its path to raise interest rates aggressively against the backdrop of a volatile stock market, strong consumer spending and tight labor conditions.

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.

"Right now, we are at the confluence of four headwinds - a slowdown in economic growth rate in the United States, Fed tightening monetary policy, a rise in interest rates and a red hot inflation," said David Sekera, chief U.S. market strategist, at Morningstar.

At 12:11 p.m. ET, the Dow Jones Industrial Average was down 172.65 points, or 0.52%, at 32,738.25, the S&P 500 was down 26.40 points, or 0.64%, at 4,089.37, and the Nasdaq Composite was down 90.96 points, or 0.75%, at 11,995.31.

Alibaba Group slid 7.9% after its affiliate Ant Group said it has no plan to initiate an initial public offering.

Tesla Inc rose 2.2% as the electric automaker sold 32,165 China-made vehicles last month, up sharply from 1,152 in April. Brokerage UBS upgraded the stock to "buy" and raised its profit estimates for the next three years.

NXP Semiconductors jumped 6.1% on report Samsung Electronics plans to acquire the Dutch chipmaker.

Declining issues outnumbered advancers for a 3.82-to-1 ratio on the NYSE and for a 2.51-to-1 ratio on the Nasdaq.

The S&P index recorded one new 52-week highs and 30 new lows, while the Nasdaq recorded 13 new highs and 82 new lows.