Wall Street ends sharply lower on fears of aggressive Fed

Wall Street ends sharply lower on fears of aggressive Fed

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* Benchmark 10-year U.S. Treasury yield rises past 3% (Updates with end of session)

By Noel Randewich and Bansari Mayur Kamdar

Aug 22 (Reuters) - Wall Street ended sharply lower on Monday as investors fretted about a U.S. Federal Reserve gathering later this week in Jackson Hole, Wyoming, that is expected to reinforce a strong commitment by the central bank to stamp out inflation.

All of 11 S&P 500 sector indexes fell for most of the session, led lower by technology .SPLRCT , consumer discretionary .SPLRCD and communication services .SPLRCL .

Amazon.com Inc AMZN.O , Nvidia Corp NVDA.O , Microsoft Corp MSFT.O and Tesla Inc TSLA.O all tumbled as the benchmark 10-year U.S. Treasury yield rose past 3% for the first time since July 21.

Technology and other higher-growth stocks often fall when bond yields rise.

After a summer rally on Wall Street ended last week, the S&P 500 .SPX remains down about 13% so far in 2022, and the Nasdaq .IXIC is down more than 20%.

The CBOE Volatility index .VIX , Wall Street's fear gauge, rose to 24.4, its highest in over two weeks.

Focus is on Fed Chair Jerome Powell's speech on Friday at the central banking conference in Jackson Hole for further cues on how aggressively the Fed is likely to be with future interest rate hikes.

"Powell is going to try to sound hawkish to tamp down inflationary expectations and tighten financial conditions. So that's most likely going to be a negative catalyst for the market," warned Jay Hatfield, chief investment officer at Infrastructure Capital Management in New York.

The Fed will probably raise interest rates by 50 basis points in September, according to economists polled by Reuters.

However, traders are split between a 50 bps hike and a 75 bps hike by the central bank after several policymakers recently pushed back against expectations of a dovish pivot and emphasized the Fed's commitment to 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.

According to preliminary data, the S&P 500 .SPX lost 89.65 points, or 2.12%, to end at 4,138.83 points, while the Nasdaq Composite .IXIC lost 320.07 points, or 2.52%, to 12,385.14. The Dow Jones Industrial Average .DJI fell 632.72 points, or 1.88%, to 33,074.02.

Slowdown fears hit 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.

Also bleeding into negative sentiment on Wall Street, European shares dropped after Russia's Gazprom GAZP.MM said last week it would halt natural gas supplies to Europe for three days at the end of August.

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

Signify Health Inc SGFY.N surged following a report on Sunday that UnitedHealth Group Inc UNH.N , Amazon, CVS Health Corp CVS.N and Option Care Health Inc OPCH.O were bidding to acquire the company.
Reporting by Bansari Mayur Kamdar and Devik Jain in Bengaluru, and by Noel Randewich in Oakland, Calif.; Editing by Marguerita Choy