Wall Street loses over 1% amid fading rate-cut hopes

Other growth stocks also came under pressure, with Alphabet , Amazon.com and Microsoft down between 2.3% and 4.1%.

Meanwhile, U.S. economic growth slowed more than expected in the first quarter, but an acceleration in inflation suggested that the Fed would not cut interest rates before September.

"The combination of some bad earnings and bad economic reports when it comes to inflation kind of set us off on this trend right now," said Joe Saluzzi, co-founder of Themis Trading.

"It's too soon to be tossing around words (like) stagflation, where the economy is wallowing and inflation is still rising. Those data points certainly would support that, but it's kind of early to say we're in that mode."

Alphabet, Microsoft and Intel are scheduled to report their quarterly numbers on Thursday after markets close.

Yields across government bonds advanced, with the yield on the 10-year Treasury note rising to multi-month highs. It was last standing at 4.7019%.

Separately, the number of Americans filing new claims for unemployment benefits unexpectedly fell last week, pointing to still tight labor market conditions.

The data comes ahead of the Personal Consumption expenditures (PCE) index, the Fed's preferred inflation gauge, on Friday.

Money markets are pricing in just about 36 basis points of rate cuts from the Fed this year, down from about 150 bps seen at the start of the year, according to LSEG data.

At 11:34 a.m. ET, the Industrial Average was down 619.28 points, or 1.61%, at 37,841.64, the S&P 500 was down 65.74 points, or 1.30%, at 5,005.89, and the Composite was down 278.87 points, or 1.77%, at 15,433.88.

Communication services led losses across the major S&P 500 sectors with a 5% fall, on track for its biggest one-day decline since October.

Downbeat results from other companies also weighed on equities, with International Business Machines shedding 9.2% after the firm said it will buy HashiCorp in a deal valued at $6.4 billion, and as its first-quarter revenue missed estimates.

Southwest Airlines slid 8.4% after slashing its estimates for new aircraft deliveries from Boeing in 2024 for the third time, saying it plans to undertake cost-cutting measures to ease the resultant blow.

Caterpillar lost 7% after the company said it expects sales to fall in the second quarter as demand for its construction equipment eases from last year's boom.

On the bright side, Newmont gained 10.2% after the world's largest gold miner beat Wall Street estimates for first-quarter profit.

Declining issues outnumbered advancers for a 4.78-to-1 ratio on the NYSE and for a 3.25-to-1 ratio on the Nasdaq.

The S&P index recorded 11 new 52-week highs and six new lows, while the Nasdaq recorded 16 new highs and 146 new lows.