Wall Street ended sharply lower on Thursday, with steep losses in Nvidia and other AI heavyweights, as investors scaled back expectations of interest rate cuts due to inflation worries and divisions among central bankers about the US economy's health.

All three major US stock indexes posted their steepest daily percentage declines in over a month.

The declines come even though the US 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 signalled hesitation about further interest rate cuts, pushing financial market-based odds of a reduction in borrowing costs in December to near even.

"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 US stock market's strongest performers in recent years, as investors fretted about high valuations fuelled by optimism about artificial intelligence.

Nvidia, the world's most valuable company, dropped 3.6 percent, Tesla fell 6.6 percent and Broadcom declined 4.3 percent.

"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 declined 1.7 percent to end the session at 6,737 points. The Nasdaq fell 2.3 percent to 22,870 points, while the Dow Jones Industrial Average declined 1.7 percent to 47,457.

Walt Disney tumbled 7.8 percent after the media giant signalled it was preparing for a potentially prolonged fight with YouTube TV over distribution of its cable channels.

Cisco Systems rallied 4.6 percent after raising full-year profit and revenue forecasts, betting on demand for its networking equipment. (Reuters)