Wall Street retreats as IMF cuts US growth forecast

US stocks traded lower in the morning session on Thursday, as the International Monetary Fund (IMF) cut US economic growth forecast for 2015 down to 2.5 percent from its April's prediction of 3.1 percent.

IMF chief Christine Lagarde said on Thursday that the revised down forecast was largely due to the soft performance in the first quarter. The US economy shrank at an annual rate of 0.7 percent in the first quarter, marking the third quarterly contraction after the financial crisis ended in mid-2009.

The IMF suggested the US Federal Reserve should delay its first interest rate hike into the first half of 2016 in order to see greater signs of inflation growth, Xinhua reported.

At midday, the Dow Jones Industrial Average fell 119.64 points, or 0.66 percent, to 17,956.63. The S&P 500 lost 12.18 points, or 0.58 percent, to 2,101.89. The Nasdaq Composite Index was down 22.99 points, or 0.45 percent, to 5,076.24.

Overseas, the Greek government on Thursday expressed optimism over a "mutually acceptable" deal with international creditors on the country's debt repayment arrangements following the latest inconclusive talks in Brussels.

But Greece and its international creditors still need a few more days to clinch a deal, said Greek Prime Minister Alexis Tsipras after a marathon meeting with European Commission President Jean-Claude Juncker and Eurogroup President Jeroen Dijsselbloem.

Greece faces mounting pressure as it is due to make a repayment of 300 million euros ($329 million) to the IMF on Friday.

Meanwhile, the US Department of Labour said on Thursday that in the week ending May 30, the advance figure for seasonally adjusted initial jobless claims was 276,000, a decrease of 8,000 from the previous week's revised level, in line with market estimates.

US stocks posted sizable gains on Wednesday, as investors were digesting a string of roughly positive economic data and the Federal Reserve's Beige Book.