Wall Street's main indices have ended modestly lower in a choppy session as hawkish comments from a US Federal Reserve official and data showing the labour market remained tight led some investors to worry about more aggressive interest rate hikes.
St Louis Fed President James Bullard said the central bank needed to keep raising rates given that its tightening so far "had only limited effects on observed inflation".
Stocks have retreated in recent days after a strong month-long rally spurred by softer-than-expected inflation reports that raised hopes the Fed would temper its rate hikes.
"The Fed is still talking up, generally, interest rates," said Paul Nolte, portfolio manager at Kingsview Investment Management in Chicago. "There might be some disagreement about the pace. But interest rates are not coming down anytime soon."
Stocks reduced losses late in the session but the major indices still ended in negative territory.
The Dow Jones Industrial Average fell 7.51 points, or 0.02 per cent, to 33,546.32, the S&P 500 lost 12.23 points, or 0.31 per cent, to 3,946.56 and the Nasdaq Composite dropped 38.70 points, or 0.35 per cent, to 11,144.96.
Data showed the number of Americans filing new claims for unemployment benefits fell last week, suggesting the labour market remained tight. A report on Wednesday detailed strong retail sales growth last month, indicating the economy has weathered rate hikes.
Bets from traders of a 75-basis point hike at the Fed's next meeting climbed to 19 per cent from about 15 per cent a day earlier, according to the CME Group's FedWatch tool. Most investors still expect a 50 basis point increase.
Cisco Systems shares rose 5 per cent after the company raised its full-year revenue and profit forecast with supply chain hurdles easing. The stock helped the S&P 500 information technology sector log a 0.2 per cent gain.
Most S&P 500 sectors ended lower, however, with utilities shedding 1.8 per cent and consumer discretionary dropping about 1.3 per cent.
In company news, shares of Macy's surged 15 per cent after the department store chain raised its annual profit forecast on resilient demand for high-end clothes and beauty products.