By Caroline Valetkevitch

NEW YORK (Reuters) – The U.S. S&P500 stock index posted its worst daily fall since April and its first monthly drop since January on Thursday, as economic data sparked concern the Federal Reserve could raise interest rates sooner than some have expected.

Data showing that U.S. labor costs recorded their biggest gain in more than 5-1/2 years in the second quarter this year came a day after the Fed upgraded its assessment of the U.S. economy while reiterating it was in no hurry to raise rates.

Problems in overseas economies added to the bearish tone, with Argentina defaulting on its debt for the second time in 12 years.

“If we start to see wages moving higher that’s got a be a signal that we are getting closer to the Fed’s mandates,” said Quincy Krosby, market strategist at Prudential Financial in Newark, New Jersey.

The Fed has kept overnight rates near zero since December 2008, but at its meeting on Wednesday it took note of both faster economic growth and a decline in the unemployment rate, while expressing concern about remaining slack in the labor market.

On Thursday, all 10 S&P500 index stock sectors fell more than 1.0 percent, with energy (.SPNY) down 2.4 percent leading the decline. Exxon Mobil Corp’s (XOM.N) second-quarter earnings beat expectations but oil production dropped, and its shares fell 4.2 percent to $98.94.

For more: Yahoo finance.

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