* Indexes slump: Dow 0.99 pct, S&P 1.03 pct, Nasdaq 2.02 pct
* Nine of 11 sectors lower, with 4 falling more than 1 pct
* Financials rise as 10-yr yields hit 7-yr high
* FAANG stocks fall between 1.7 pct and 4 pct
* CBOE volatility index at over three-week high (Updates to early afternoon)
By Medha Singh
Oct 4 (Reuters) - Wall Street tumbled on Thursday, mirroring a slump in global financial markets, as U.S. Treasury yields surged to multi-year highs on robust economic data and upbeat comments from the Federal Reserve, sparking fears of accelerating inflation.
The Dow Jones Industrial Average dropped for the first time in six days and, along with the benchmark S&P 500 , was on pace for its biggest one-day drop since late June. The Nasdaq dived nearly 2 percent, dragged down by a drop in heavyweight stocks.
Nine of the 11 major S&P sectors were lower. The communication services sector slumped 1.93 percent, with Alphabet and Netflix dropping more than 2.5 percent each, while Facebook slid 2.80 percent.
Technology stocks declined 2 percent and were the biggest drag on the markets. Apple fell 1.87 percent.
Healthcare and consumer discretionary groups also lost more than 1 percent.
The yield on the benchmark 10-year note was perched at seven-year high as strong economic data on Wednesday raised expectations that the non-farm payrolls report due on Friday morning would come in stronger than anticipated.
Of particular interest will be the wage growth for September, especially in the light of Amazon.com raising its minimum wage to $15 earlier this week.
“I will be more interested in the wage growth figure, as another surprise to the upside will fuel expectations that inflation will run above the targeted 2 percent and the Fed may need to tighten policy faster than previously projected,” said Hussein Sayed, chief market strategist at FXTM.
The financial sector gained 0.45 percent as the yield curve – the spread between two- and 10-year yields – steepened to a two-month high. Bank stocks jumped 0.52 percent.
At 12:53 a.m. EDT the Dow Jones Industrial Average was down 266.09 points, or 0.99 percent, at 26,562.30, the S&P 500 was down 30.21 points, or 1.03 percent, at 2,895.30 and the Nasdaq Composite was down 161.77 points, or 2.02 percent, at 7,863.32.
The CBOE Global Markets volatility index, known as Wall Street’s “fear gauge”, rose 3.55 points, its highest surge in more than three weeks.
Despite the pullback, U.S. stocks are trading near record levels, raising concerns about valuations with the earnings season just around the corner.
“The equity market are seeing bonds as more of a competition but I don’t think there is anything structural here. I think it’s more of a pause for equities,” said Tony Roth, chief investment officer at Wilmington Trust in Wilmington, Delaware.
Among gainers, Constellation Brands shares rose 4.59 percent after the Corona beer maker raised its full-year profit forecast and topped Wall Street’s estimates for second-quarter sales and profit.
Eli Lilly shares gained 3.07 percent after the company’s experimental diabetes drug showed promise in a mid-stage trial.
Declining issues outnumbered advancers for a 4.61-to-1 ratio on the NYSE and a 3.76-to-1 ratio on the Nasdaq.
The S&P index recorded eight new 52-week highs and 17 new lows, while the Nasdaq recorded 20 new highs and 76 new lows. (Reporting by Medha Singh in Bengaluru; Editing by Anil D’Silva)