(Updates with afternoon trading)

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Cisco Systems ( CSCO ) gains after annual revenue forecast hike

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Disney ( DIS ) warns of long distribution dispute with YouTube TV

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S&P 500 -1.62%, Nasdaq -2.48%, Dow -1.38%

By Noel Randewich and Twesha Dikshit

Nov 13 (Reuters) -

Wall Street tumbled on Thursday, with steep losses in Nvidia ( NVDA )

and other AI heavyweights, as investors scaled back expectations

of interest rate cuts due to inflation worries and divisions

among central bankers about the U.S. economy's health.

The U.S. government

reopened

after a record 43-day shutdown that had worried investors

and disrupted the flow of economic data.

A

growing number

of Federal Reserve policymakers in recent days have

signaled hesitation about further interest rate cuts, pushing

financial market-based odds of a reduction in borrowing costs in

December to near even. Fed officials who spoke recently cited

worries about inflation and signs of relative stability in the

labor market after two U.S. interest rate cuts this year.

"The fundamental question is, is tariff inflation

transitory and a one-time deal? And whether it is or isn't,

that's why some of the Fed governors don't want to cut," said

Jake Dollarhide, chief executive officer of Longbow Asset

Management in Tulsa, Oklahoma. "It's a risky bet either way,

whether they cut or don't cut."

Shares fell for some of the U.S. stock market's strongest

performers in recent years, as investors fretted about high

valuations fueled by optimism about artificial intelligence.

Nvidia ( NVDA ), the world's most valuable company, dropped

4.7%, Tesla fell 7.6% and Broadcom ( AVGO ) declined

5.4%.

"There's a lot of uncertainties about the state of the

economy. ... What we're going through is a little bit of a

correction in the market in the AI sector and we're seeing

market rotation," said Peter Cardillo, chief market economist at

Spartan Capital Securities in New York.

The S&P 500 was down 1.62% at 6,739.60 points.

The Nasdaq declined 2.48% to 22,825.50 points, while the

Dow Jones Industrial Average was down 1.38% at 47,590.87 points.

Eight of the 11 S&P 500 sector indexes declined, led lower

by information technology, down 2.74%, followed by a

2.58% loss in consumer discretionary.

Cisco Systems ( CSCO ) rallied about 5% after raising

full-year profit and revenue forecasts, betting on demand for

its networking equipment.

On Tuesday and Wednesday, the Dow notched record high

closes, benefiting from investors selling technology stocks and

moving money into the health care sector.

Reflecting Wall Street's rotation away from tech stocks,

the S&P 500 value index has gained about 1.4% so far this

week, while the growth index has dipped 0.7%.

Walt Disney ( DIS ) tumbled 7.7% after the media giant

signaled it was preparing for a potentially prolonged fight with

YouTube TV over distribution of its cable channels.

Recently, data from payroll processor ADP showed private

employers shed over 11,000 jobs a week through late October and

Indeed Hiring Lab showed a 16% drop in retail-related job

postings in October from a year ago, pointing to continued

weakness in the labor market.

Traders are pricing in about a 47% chance of a

25-basis-point rate cut in December, lower than last week's 70%

probability, according to CME Group's FedWatch tool.

APA Corp ( APA ) gained 3.2% after a report that Spain's

Repsol is considering a reverse merger of its upstream

unit with potential partners, including the energy producer.

Memory device makers Western Digital ( WDC ) and SanDisk ( SNDK )

dropped 3.1% and 10.7%, respectively, after Japanese

memory manufacturer Kioxia Holdings ( KXHCF ) reported lower sales and

profits.

Declining stocks outnumbered rising ones within the S&P 500

by a 1.8-to-one ratio.

The S&P 500 posted 15 new highs and 6 new lows; the Nasdaq

recorded 51 new highs and 178 new lows.