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Indexes: Dow down 1.91%, S&P 500 down 1.61%, Nasdaq down

1.41%

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Wolfspeed ( WOLF ) plunges after reports of potential bankruptcy

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Target ( TGT ) falls after cutting annual sales forecast

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UnitedHealth ( UNH ) drops after report on secret payments, HSBC

downgrade

(Updates to 4:10 PM ET)

By Chibuike Oguh

NEW YORK, May 21 (Reuters) - U.S. stocks closed sharply

lower on Wednesday as Treasury yields spiked on worries that

U.S. government debt would swell by trillions of dollars if

Congress passes President Donald Trump's proposed tax-cut bill.

All three major Wall Street indexes closed with their

biggest daily losses in a month. Small cap stocks also fell

sharply, with the Russell 2000 index posting its biggest

daily loss since April 10.

Longer-dated Treasury yields rose after the Treasury

Department's $16 billion sale of 20-year bonds met soft demand

from investors. The yield on benchmark U.S. 10-year notes

rose 10.8 basis points to 4.589%. During the

session, the 10-year yield hit its highest since mid-February.

A Congressional committee set an unusual hearing as House

Republicans sought to overcome internal divisions about proposed

budget cuts, including to the Medicaid health program.

Nonpartisan analysts said the Republican bill could add

between $3 trillion and $5 trillion to the federal government's

$36.2 trillion debt.

"There are any number of headlines, all of which have

consequences if indeed they come to pass," said Michael Farr,

chief executive officer at investment advisory firm Farr, Miller

& Washington in Washington. "Many of these things are threats

that fade rather quickly and markets are trying to digest what's

important or what's material or what's perhaps negotiating

bluster on behalf of the administration."

The Dow Jones Industrial Average fell 816.80 points,

or 1.91%, to 41,860.44, the S&P 500 lost 95.85 points, or

1.61%, to 5,844.61 and the Nasdaq Composite lost 270.07

points, or 1.41%, to 18,872.64.

Ten of the 11 S&P 500 sectors fell, led by real estate,

healthcare, financials, utilities, consumer discretionary and

technology equities. Communication services stocks gained.

Google parent Alphabet rose 2.7%, while Nvidia ( NVDA )

lost 1.9%, Apple ( AAPL ) fell 2.3% and Tesla

shed 2.7%.

UnitedHealth Group ( UNH ) dropped nearly 6% after a

Guardian report said the healthcare conglomerate secretly paid

nursing homes thousands of dollars in bonuses to help reduce

hospital transfers for ailing residents. HSBC downgraded the

stock to "reduce" from "hold".

Target ( TGT ) fell 5.2% after slashing its annual forecast

due to a pullback in discretionary spending.

Wolfspeed ( WOLF ) plunged nearly 60% following a report

that the semiconductor supplier was preparing to file for

bankruptcy within weeks.

The S&P 500 has climbed more than 17% from its April lows,

when Trump's reciprocal tariffs roiled global markets.

Morgan Stanley upgraded its stance on U.S. equities to

"overweight", saying the global economy was still expanding,

albeit slowly, amid policy uncertainty.

Declining issues outnumbered advancers by a 5.82-to-1 ratio

on the NYSE. There were 188 new highs and 104 new lows on the

NYSE.

The S&P 500 posted 15 new 52-week highs and 4 new lows

while the Nasdaq Composite recorded 53 new highs and 92 new

lows.

Volume on U.S. exchanges was 19.39 billion shares,

compared with the 17.5 billion average for the full session over

the last 20 trading days.