Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., January 26, 2022.
Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., January 26, 2022. Reuters / BRENDAN MCDERMID

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 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 lost 98.07 points, or 2.38%, to end at 4,017.70 points, while the Nasdaq Composite lost 332.49 points, or 2.75%, to 11,753.78. The Dow Jones Industrial Average 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.

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