Wall St slumps more than 1% on fears of aggressive Fed

Wall St slumps more than 1% on fears of aggressive Fed

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* Megacap growth, tech stocks extend losses

* Amazon, UnitedHealth among bidders for Signify - report

* AMC tumbles as UK's Cineworld mulls bankruptcy filing

* Indexes down: Dow 1.18%, S&P 1.41%, Nasdaq 1.67% (Updates prices to open)

By Bansari Mayur Kamdar and Devik Jain

Aug 22 (Reuters) - Wall Street's main indexes tumbled more than 1% on Monday in a dour start to the week as investors worried about hawkish signals from Federal Reserve policymakers against the backdrop of slowing economic growth.

All the 11 major S&P 500 sectors declined in early trading, with rate-sensitive information technology .SPLRCT , consumer discretionary .SPLRCT and communication services .SPLRCL stocks among the top losers.

High-growth companies such as Apple Inc AAPL.O and Tesla Inc TSLA.O fell 1.4% and 2.4%, respectively.

A four-week summer rally for the Nasdaq and the S&P 500 snapped last week after growth stocks tumbled as the benchmark 10-year Treasury yield hit nearly 3% on inflation fears.

Banks .SPXBK fell 2.1% on Monday, with lenders JPMorgan Chase & Co JPM.N and Bank of America BAC.N down nearly 2% each.

Banking giants collectively face more than $1 billion in regulatory fines for employees' use of unapproved messaging tools, including email and apps such as WhatsApp.

The CBOE Volatility index .VIX , Wall Street's fear gauge, rose to 23.26, its highest level in over two weeks.

Hopes of a dovish pivot by the Fed and strong quarterly earnings helped the benchmark S&P 500 .SPX rebound nearly 14.5% from its mid-June lows after a rough start to the year.

Focus this week is on Fed Chair Jerome Powell's speech at a central banking conference in Jackson Hole on Friday for further cues on the monetary policy tightening path.

"The market convinced itself that the CPI last month suggested peak inflation has been reached ... but that was short sighted," said Kenny Polcari, managing partner at Kace Capital Advisors.

"Jackson Hole will give Powell an opportunity to reset the narrative and suggest the Fed is going to remain vigilant and aggressive."

The Fed will raise rates by 50 basis points (bps) in September, according to economists polled by Reuters.

Traders are also expecting a slightly higher chance of a 50 bps hike over a third 75 bps hike, even as several policymakers have pushed back against expectations of a dovish pivot and emphasized the fight against inflation.

Investors will also be looking for details on the Fed's plans to reduce its nearly $9 trillion balance sheet, a process that started in June.

The Fed's favored inflation gauge, the PCE price index, will also be released this week.

Investors eager for clues about the economy's strength amid rising fears of a recession will also closely track the flash readings on business activity, the second estimate of second-quarter GDP and University of Michigan consumer sentiment.

At 09:39 a.m. ET, the Dow Jones Industrial Average .DJI was down 397.64 points, or 1.18%, at 33,309.10, the S&P 500 .SPX was down 59.65 points, or 1.41%, at 4,168.83, and the Nasdaq Composite .IXIC was down 212.19 points, or 1.67%, at 12,493.03.

Slowdown fears also knocked out markets globally. China's central bank trimmed some key lending rates on Monday in a bid to support a slowing economy and a stressed housing sector.

Signify Health Inc SGFY.N jumped 37.8% following a report on Sunday that UnitedHealth Group Inc UNH.N , Amazon.com Inc AMZN.O , CVS Health Corp CVS.N and Option Care Health Inc OPCH.O were bidding to acquire the company.

AMC Entertainment Holdings Inc AMC.N tumbled 36.6% after the American cinema chain's preferred stock listing started trading and its UK-based rival Cineworld Group CINE.L warned of a possible bankruptcy filing.

Declining issues outnumbered advancers for a 8.41-to-1 ratio on the NYSE and a 4.21-to-1 ratio on the Nasdaq.

The S&P index recorded one new 52-week highs and 29 new lows, while the Nasdaq recorded 13 new highs and 78 new lows.
Reporting by Bansari Mayur Kamdar and Devik Jain in Bengaluru; Editing by Shounak Dasgupta and Sriraj Kalluvila