Wall Street gave up gains made earlier on Thursday as a contraction in manufacturing activity last month clouded data showing a mild easing in inflation and solid consumer spending, while a fall in Salesforce shares US manufacturing activity shrank for the first time in 2-1/2 years in November as higher borrowing costs weighed on demand for goods, and proved to be a trigger for investors to book profits following a rally in the previous session.
Federal Reserve Chair Jerome Powell said on Wednesday it was time to slow down coming interest rate hikes, while also signalling a protracted economic adjustment amid high borrowing costs, pushing the S&P 500 index above its 200-day moving average for the first time since April.
Markets were boosted earlier in the day by a reading from the Commerce Department, which showed consumer spending, that accounts for more than two-thirds of U.S. economic activity, rose 0.8% after an unrevised.
Investors now await nonfarm payrolls data on Friday, with the ADP report on Wednesday suggesting cooling demand for labour.
Separately, a report from the Labour Department on Thursday showed initial claims for state unemployment benefits dropped 16,000 to a seasonally adjusted 225,000 for the week ended Nov. 26.
At 10:33 am ET, the Dow Jones Industrial Average was down 439.25 points, or 1.27%, at 34,150.52, the S&P 500 was down 26.13 points, or 0.64%, at 4,053.98, and the Nas.