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CORRECTED-US STOCKS-S&P 500 sinks to two-year low as bear market deepens

(Corrects fifth paragraph to show S&P 500 record was on Jan. 3, not Jan. 23)

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S&P 500 hits lowest since November 2020

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Utility, consumer discretionary sectors lead declines

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Investors worry about shrinking corporate profit growth

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Indexes: Dow -0.74%, S&P 500 -0.57%, Nasdaq -0.24%

By Noel Randewich and Shreyashi Sanyal

Sept 27 (Reuters) - Wall Street sank deeper into a bear market on Tuesday, with the S&P 500 hitting a two-year intraday low as Federal Reserve policymakers showed an appetite for more interest rate hikes, even at the risk of throwing the economy into a downturn.

With the Fed signaling last week that high interest rates could last through 2023, the benchmark S&P 500 erased the last of its gains from a summer rally and touched lows last seen in late November 2020.

On Tuesday, St. Louis Fed President James Bullard made a case for more rate hikes, while Chicago Fed President Charles Evans said the central bank will need to raise rates by at least another percentage point this year.

"It's disappointing, but it's not a surprise," said Robert Pavlik, senior portfolio manager at Dakota Wealth in Fairfield, Connecticut. "People are concerned about the Federal Reserve, the direction of interest rates, the health of the economy."

With Tuesday's drop, the S&P 500 is down 24% from its record high close on Jan. 3.

Analysts at Wells Fargo now see the U.S. central bank taking its target range for the Fed funds rate to between 4.75% and 5.00% by the first quarter of 2023.

Ten of 11 S&P 500 sector indexes fell, led down by a 2.0% drop in utilities and a 1.8% decline in consumer staples.

Microsoft and Google-parent Alphabet each lost just over 1% and weighed heavily on the S&P 500. Tesla also rose about 1%, with $13 billion worth of its shares exchanged, more than any other company on Wall Street.

The benchmark U.S. 10-year Treasury yield touched its highest level in more than 12 years amid the hawkish comments from Fed officials.

In afternoon trading, the Dow Jones Industrial Average was down 0.74% at 29,045.38 points, while the S&P 500 lost 0.57% to 3,634.13.

The Nasdaq Composite dropped 0.24% to 10,777.00.

Concerns about corporate profits taking a hit from soaring prices and a weaker economy have also roiled Wall Street in the past two weeks.

Analysts have cut their S&P 500 earnings expectations for the third and fourth quarters, as well as for the full year. For the third quarter, analysts now see S&P 500 earnings per share rising 4.6% year-over-year, compared with 11.1% growth expected at the start of July.

Declining issues outnumbered advancing ones on the NYSE by a 1.60-to-1 ratio; on Nasdaq, a 1.21-to-1 ratio favored decliners.

The S&P 500 posted no new 52-week highs and 138 new lows; the Nasdaq Composite recorded 24 new highs and 425 new lows. (Reporting by Ankika Biswas, Shreyashi Sanyal and Susan Mathew in Bengaluru; Editing by Shounak Dasgupta, Arun Koyyur and David Gregorio)