US STOCKS-S&P 500 at lowest since March as rate fears set in
* Wal-Mart surges after results beat estimates
* NY Fed's Dudley says June, July hike "reasonable"
* Monsanto rallies after Bayer makes unsolicited bid
* Indexes down: Dow 0.69 pct, S&P 0.65 pct, Nasdaq 0.90 pct (Updates to afternoon)
By Noel Randewich
May 19 (Reuters) - The S&P 500 was heading for its lowest close in two months on Thursday as Wall Street became more worried that the U.S. Federal Reserve might raise interest rates as early as June.
The timing of future rate hikes by the Fed in the face of a sluggish economy is a major ongoing concern among stock investors who have benefited from historically low borrowing costs since the 2008 financial crisis.
In a new blow to Wall Street's confidence, New York Fed President William Dudley said on Thursday the U.S. economy could be strong enough to warrant an interest rate increase in June.
That followed the release on Wednesday of minutes from the Fed's April meeting that showed most policymakers thought a June rate hike was appropriate, surprising many investors who had expected policymakers to wait until September due to a lackluster economic recovery. Continuación...