U.S. stocks fell sharply on Thursday after the Federal Reserve signaled the possibility of an interest rate hike as early as June and a stronger dollar and oversupply concerns pressured oil prices.
The S&P 500 and Dow fell to two-month lows in late morning trading.
Minutes of the Fed's April meeting, released on Wednesday, caught the market by surprise as they showed that most policymakers thought a June rate hike was appropriate, given continued improvement in the U.S. economy.
New York Fed President William Dudley said on Thursday that June is definitely a "live" meeting and that a rate hike in June or July is a reasonable expectation.
Dudley is a voting member of the central bank's policy setting committee. The Fed next meets on June 14-15.
Following the release of the minutes, traders were projecting a 34 percent chance of the central bank raising rates in June, up from 15 percent on Tuesday, according to the CME FedWatch tool.
Crude oil prices fell more than 2 percent on Thursday as the dollar's surge on rate hike expectations drove players from the oil market. [O/R]
The dollar index jumped to a two-month high against a basket of major currencies.
"The main driver of what's going on, is the Fed. The market had believed that there may be one rate hike and certainly they had taken June off the table," said Ernie Cecilia, chief investment officer of Bryn Mawr Trust.
"I think that (the market) had become complacent."
At 11:05 a.m. ET (1505 GMT), the Dow Jones industrial average was down 185.45 points, or 1.06 percent, at 17,341.17, the S&P 500 was down 19.97 points, or 0.98 percent, at 2,027.66 and the Nasdaq Composite was down 51.17 points, or 1.08 percent, at 4,687.95.
Eight of the 10 major S&P sectors were lower, with the telecom services index's 1.7 percent fall leading the decliners.
Initial jobless claims fell to 278,000, from a 14-month high last week. Economists were expecting a fall to 275,000.
"What we need most...is faster potential growth," Fed Vice Chair Stanley Fischer said in New York, but did not comment on the likelihood of a hike in June.
Dow component Wal-Mart's shares surged 9.1 percent to $68.90 after the retailer reported first-quarter results that beat analysts' estimates, in contrast with a string of weak results by competitors.
Cisco Systems was up 3.6 percent at $27.69 after the network equipment maker reported better-than-expected results.
Monsanto was up 5 percent at $101.97 after disclosing German group Bayer has made an unsolicited takeover proposal.
Declining issues outnumbered advancing ones on the NYSE by 2,405 to 479. On the Nasdaq, 1,937 issues fell and 597 advanced.
The S&P 500 index showed five new 52-week highs and three new lows, while the Nasdaq recorded eight new highs and 40 new lows.
(Reporting by Yashaswini Swamynathan; Editing by Don Sebastian)
This story has not been edited by Firstpost staff and is generated by auto-feed.
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Updated Date: May 19, 2016 21:52:55 IST