Market sentiments were also weighed down amid continued increase by treasury yields. The yield on the benchmark 10-year U.S. Treasury note hit four-week highs at 4.6%, extending Tuesday's gains, after weak debt auctions.
The Commerce Department is due to release its report on personal income and spending in the month of April on Friday, which includes readings on inflation said to be preferred by the Federal Reserve. The inflation data could have a significant impact on the outlook for interest rates ahead of the Fed's next monetary policy meeting on June 11-12.
At closing bell, the Dow Jones Industrial Average index declined 411.32 points, or 1.06%, to 38,441.54. The S&P500 index dropped 39.09 points, or 0.74%, to 5,266.95. The tech-heavy Nasdaq Composite index decreased by 99.30 points, or 0.58%, to 16,920.58.
All sectors ended lower along with the S&P500 Index. Energy sector was bottom performer, falling 1.76%. Industrials and material both sectors were down 1.42%.
ECONOMIC NEWS: Fed's Beige Book Says US Economy Continued To Expand, Prices Rose Modestly- U.S. economic activity continued to expand from early April to mid-May, according to the Federal Reserve's Beige Book, although conditions varied across industries and districts. The Fed's Beige Book, a compilation of anecdotal evidence on economic conditions in each of the twelve Fed districts, said most districts reported slight or modest growth but two noted no change in activity. The report described retail spending as flat to up slightly, reflecting lower discretionary spending and heightened price sensitivity among consumers. The Fed said contacts in most districts noted consumers pushed back against additional price increases, which led to smaller profit margins as input prices rose on average. Meanwhile, the Beige Book said travel and tourism strengthened across much of the country, boosted by increased leisure and business travel, but hospitality contacts were mixed in their outlooks for the summer season. The report also said demand for non-financial services rose, activity in transportation services was mixed and manufacturing activity was widely characterized as flat to up. With regard to the labor market, the Fed said overall employment rose slightly, with eight districts reporting negligible to modest job gains and the remaining four reporting no changes in employment. The Beige Book also said wage growth remained mostly moderate, although some districts reported more modest increases. The report also said prices increased at a modest pace over the reporting period and are expected to continue to grow at a modest pace in the near term.
US Crude Oil Inventories Fall By 6.5 Million Barrels- Crude oil inventories in the United States fell by 6.490 million barrels for the week ending May 17, according to The American Petroleum Institute (API). For the week prior, the API reported a 2.48 million barrel hike in crude inventories. Gasoline inventories fell as well, by 452,000 barrels, after last weeks 2.088 million barrel increase. Distillate inventories rose this week by 2.045 million barrels, after last weeks 320,000-barrel dip.
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