Investing.com -- U.S. stocks fell sharply on Thursday, as the Dow Jones Industrial Average extended losses from the previous session while investors digested hawkish indications from the Federal Reserve that it will likely raise interest rates next month if the domestic economy continues to demonstrate signs of improvement.
On Thursday morning, New York Fed president William Dudley noted that it could be appropriate to raise interest rates in June or July if U.S. GDP continues to pick up following a weak first quarter. Speaking at a New York Fed event, Dudley also acknowledged that the Fed should weigh the potential of a U.K. departure from the European Union as it makes its decision. The FOMC has left its benchmark Federal Funds Rate unchanged at 0.25-0.50% in three meetings in 2016, after raising it for the first time in seven years in a historic decision last December. A move by the Fed to tighten its monetary policy cycle is regarded as bearish for U.S. equities as investors pile into the dollar and safe-haven assets such as U.S. government bonds in an effort to capitalize on higher yields.
The Dow lost 91.22 or 0.52% to 17,435.40, while the S&P 500 Composite index fell 7.59 or 0.37% to 2,040.04, as both indices continue to retreat from April highs. The NASDAQ Composite index, meanwhile, dipped 26.59 or 0.56% to 4,712.53 amid a weak session among pharmaceutical stocks. While the major indices came off session-lows with a late rally, stocks on Wall Street still closed broadly lower. With one session left in the week, the Dow and S&P 500 are both on pace for their fourth consecutive weekly decline. On the S&P 500 six of 10 sectors closed in the red, as stocks in the Financials, Industrials and Health Care industries lagged. Stocks in the Basic Materials and the Utilities sector led, each gaining more than 0.4%.
The top performer on the Dow was Wal-Mart Stores Inc (NYSE:WMT), which surged 5.94 or 9.41% to 69.09, finishing with its strongest one-day move since October, 2008. Earlier on Thursday, Wal-Mart (NYSE:WMT) posted gains in comparative store sales for the seventh straight quarter and enjoyed its sixth consecutive quarter of increased traffic in a relatively solid opening quarter of the year. For the three-month period, Wal-Mart said 55% of its revenues were comprised of grocery sales, while less than 8% came from apparel, shoes and accessories combined. Over the last year, apparel sales have been weak industry-wide. The worst performer was Goldman Sachs Group Inc (NYSE:GS), which fell 5.05 or 3.16% to 154.89. Goldman shares tumbled amid heavy profit taking, one day after banking stocks soared following the release of the Fed's April minutes.
The biggest gainer on the NASDAQ was Cisco Systems Inc (NASDAQ:CSCO), which added 0.85 or 3.18% to 27.57. One day earlier, the California-based network service provider reported a 3% increase in net sales over the first quarter, driven by strong margins and momentum in key growth areas. The worst performer was Liberty Media (NASDAQ:LMCA), which tumbled 1.21 or 7.14% to 15.74. Shares in Liberty Media are flat over the last 52 weeks.
The top performer on the S&P 500 was Urban Outfitters Inc (NASDAQ:URBN), which surged 3.42 or 13.91% to 28.01, after reporting solid comparative store sales on Wednesday night among its namesake brand. The worst performer was Endo International PLC (NASDAQ:ENDP), which fell 0.80 or 5.14% to 14.77 after receiving a downgrade from Stifel. Shares in the specialty drugmaker are down by more than 80% over the last year.
On the New York Stock Exchange, declining issues outnumbered advancing ones by a 2,150-892 margin.