NEW YORK (Reuters) -U.S. stocks finished lower on Thursday ahead of Friday's monthly U.S. payrolls report and as investors kept a watchful eye on the growing conflict in the Middle East.

Data on Thursday showed that the number of Americans filing new applications for unemployment benefits rose marginally last week.

Still, Hurricane Helene and strikes at ports could distort the labor market picture in the near term. The key report this week for investors could be Friday's employment report for the month of September.

"It looks like investors are cautious ahead of the jobs report tomorrow," said Adam Sarhan, chief executive of 50 Park Investments in New York.

Also, he said, "it's normal to see some profit-taking after a big rally like we've had over the last two, three weeks."

Investors are eager for more data on the labor market after the Federal Reserve last month cut its benchmark interest rate by an unusually large 50 basis points, the first reduction in borrowing costs since 2020.

According to preliminary data, the S&P 500 lost 9.87 points, or 0.17%, to end at 5,699.67 points, while the Nasdaq Composite lost 4.83 points, or 0.03%, to 17,920.30. The Dow Jones Industrial Average fell 192.14 points, or 0.46%, to 42,004.38.

The S&P 500 remains up roughly 19% for the year so far.

The benchmark S&P 500 briefly turned positive after the Institute for Supply Management survey showed U.S. service sector activity jumped to a one-and-a-half-year high in September, further evidence that the economy stayed robust in the third quarter.

"Once again, services is doing the heavy lifting keeping this economy humming along," said Brian Jacobsen, chief economist at Annex Wealth Management.

But also, he said, "oil prices have moved higher and the port strike can really throw a monkey wrench in things."

The Cboe Volatility index, Wall Street's fear gauge, was higher.

Energy shares gained along with a surge in oil prices as concerns mount over a widening regional conflict in the Middle East that could pose a threat to global crude flows. The S&P 500 energy index was up about 1%.

Israel's military told residents of more than 20 towns in south Lebanon to evacuate their homes immediately. Asked on Thursday if he would support Israel striking Iran's oil facilities, U.S. President Joe Biden told reporters: "We're discussing that."

A workers' strike on the East and Gulf coasts entered its third day. Morgan Stanley economists said a prolonged stoppage could raise consumer prices, with food prices likely to react first.

Constellation Brands shares fell after the beer maker maintained its sales and profit forecast for fiscal year 2025.

Results from some of the big U.S. banks are expected to unofficially kick off third-quarter S&P 500 earnings at the end of next week.

(Additional reporting by Johann M Cherian and Purvi Agarwal in Bengaluru; Editing by Pooja Desai)