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* Consumer price index rose to 1% in May from 0.3% in April

* Netflix falls after Goldman Sachs downgrades to 'sell'

NEW YORK, June 10 (Reuters) - U.S. stocks ended down sharply on Friday and posted their biggest weekly percentage declines since January as a steeper-than-expected rise in U.S. consumer prices in May fueled investor worries about more aggressive interest rate hikes by the Federal Reserve.

Tech and growth stocks, whose valuations rely more heavily on future cash flows, led the decline. Microsoft Corp and Apple Inc were among the biggest weights on the S&P 500 and Nasdaq.

Following the inflation report, benchmark 10-year U.S. Treasury yields reached 3.152%, the highest since May 9.

The U.S. Labor Department's report showed the consumer price index (CPI) increased 1.0% last month after gaining 0.3% in April. Economists polled by Reuters had forecast the monthly CPI picking up 0.7%.

Year-on-year, CPI surged 8.6%, its biggest gain since 1981 and following an 8.3% jump in May.

Stocks have been volatile this year, and recent selling has largely been tied to uncertainty over the outlook for inflation and interest rates.

"Inflation this past month was certainly hotter than expected and a reminder that inflation will be with us for longer than we previously expected," said Michael Sheldon, chief investment officer at RDM Financial Group at Hightower in Westport, Connecticut.

"But there are some signs within the economy that ultimately inflation should start to slow, and the Fed will likely do whatever it takes to keep raising rates and reduce inflation over the coming 12 to 18 months."

According to preliminary data, the S&P 500 lost 117.05 points, or 2.91%, to end at 3,900.77 points, while the Nasdaq Composite lost 415.07 points, or 3.53%, to 11,339.16. The Dow Jones Industrial Average fell 882.47 points, or 2.73%, to 31,395.72.

The inflation report was published ahead of an anticipated second 50 basis points rate hike from the Fed next Wednesday. A further half-percentage-point is priced in for July, with a strong chance of a similar move in September.

Netflix Inc slid after Goldman downgraded the streaming giant's stock to "sell" from "neutral" due to a possibly weaker macro environment. (Additional reporting by Devik Jain, Mehnaz Yasmin and Shreyashi Sanyal in Bengaluru; Editing by Arun Koyyur, Aditya Soni and Jonathan Oatis)