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US STOCKS-Wall St falls on Fed hike jitters ahead of debt ceiling vote

(For a Reuters live blog on U.S., UK and European stock markets, click or type LIVE/ in a news window)

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US job openings unexpectedly rise in April

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Advance Auto Parts slumps after forecast cut

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Nvidia down after Tuesday's record high

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Indexes down: Dow 0.78%, S&P 0.78%, Nasdaq 0.70%

(Updates prices throughout, adds analyst comments, details on FDIC, banks)

By Shreyashi Sanyal and Shashwat Chauhan

May 31 (Reuters) -

U.S. stock indexes fell on Wednesday as a deal to raise the nation's debt ceiling headed for a crucial vote by lawmakers, while unexpectedly strong labor market data reinforced bets of another interest rate hike by the Federal Reserve.

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A bill to lift the $31.4 trillion U.S. debt ceiling and achieve new federal spending cuts made its way to the House of Representatives for debate on Tuesday and an expected vote on passage is due later in the evening.

House passage would send the bill to the Senate, where debate could stretch to the weekend, as a June 5 deadline loomed.

"All signs point to the deal getting done but there's headlines about some Congress people who are against it," said Joe Saluzzi, co-manager of trading at Themis Trading. "Until that deal gets done, there will be a little bit of nervousness."

The Labor Department's Job Openings and Labor Turnover Survey, or the JOLTS report,

showed

U.S. job openings unexpectedly rose in April, pointing to persistent strength in the labor market.

Traders are currently pricing in a nearly 70% chance of a 25-basis point increase at the Fed's June 13-14 meeting, compared to a little more than 60% chance a day earlier.

"JOLTS is a shock," said Phil Blancato, chief executive officer at Ladenburg Thalmann Asset Management in New York.

"The reality is that we're just not past this inflationary moment and it means that the Fed is not done, they're going to raise in June and probably again after that."

Investors now await the Labor Department's closely watched jobs report for May, due on Friday.

At 12:01 p.m. ET the Dow Jones Industrial Average was down 257.87 points, or 0.78%, at 32,784.91, the S&P 500 was down 32.97 points, or 0.78%, at 4,172.55 and the Nasdaq Composite was down 91.70 points, or 0.70%, at 12,925.73.

Technology-led gains have put the Nasdaq on track for its best performance in May since 2020, up 5.7%. The S&P 500 was set to end the month flat, while the Dow shed 3.8%.

The Federal Deposit Insurance Corporation

said

U.S. banks saw total deposits decline by a record 2.5% in the first quarter of 2023, after two large bank failures.

The S&P 500 financial sector index fell 1.7%, while banks dropped 2.7%.

Advance Auto Parts Inc plunged 33.9%, falling the most on the S&P 500, after the auto parts retailer cut its full-year forecasts.

Shares of other autoparts companies including Genuine Parts Co, Autozone and O'Reily Automotive fell between 4.2% and 5.5%.

Hewlett Packard Enterprise Co slipped 7.1% as it missed Wall Street estimates for second-quarter revenue.

Nvidia Corp's shares fell 3.6% after hitting a record high on Tuesday as it briefly crossed $1 trillion in market value, banking on the AI boom.

Declining issues outnumbered advancers for a 2.21-to-1 ratio on the NYSE and for a 2.02-to-1 ratio on the Nasdaq.

The S&P index recorded three new 52-week highs and 22 new lows, while the Nasdaq recorded 26 new highs and 134 new lows.

(Reporting by Shreyashi Sanyal and Shashwat Chauhan in Bengaluru; Editing by Shounak Dasgupta and Maju Samuel)