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Weekly jobless claims at 225,000

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US service sector activity accelerates to 1-1/2-year high

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East, Gulf coast workers' strike enters third day

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Indexes: Dow down 0.6%, S&P 500 off 0.3%, Nasdaq down 0.2%

(Updates to 2:30 p.m. ET/1830 GMT)

By Caroline Valetkevitch

NEW YORK, Oct 3 (Reuters) - Major U.S. stock indexes

were lower on Thursday afternoon ahead of Friday's monthly U.S.

payrolls report and as investors kept a watchful eye on the

growing conflict in Middle East.

Data on Thursday showed that the number of Americans

filing new applications for unemployment benefits rose

marginally last week.

Still, fallout from 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.

"We have a situation now where investors are looking for the

next bullish catalyst, and we've got some data coming out: it's

the jobs report, inflation and then earnings season, and of

course the ongoing situation in the Middle East."

Investors are anxious for more data on the labor market

after the Fed last month cut its benchmark interest rate by an

unusually large 50 basis points, the first reduction in

borrowing costs since 2020.

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.

The Dow Jones Industrial Average fell 245.9

points, or 0.58%, to 41,950.62, the S&P 500 lost 18.52

points, or 0.32%, to 5,691.02 and the Nasdaq Composite

dropped 39.18 points, or 0.22%, to 17,885.94.

Asked on Thursday if he would support Israel striking

Iran's oil facilities, U.S. President Joe Biden told reporters:

"We're discussing that."

Energy shares gained along with 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 1.4%.

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 ( STZ ) shares eased after the beer

maker maintained its sales and profit forecast for fiscal year

2025.

Declining issues outnumbered advancing ones on the NYSE by a

2.31-to-1 ratio; on Nasdaq, a 2.08-to-1 ratio favored decliners.

The S&P 500 posted 24 new 52-week highs and 2 new lows;

the Nasdaq Composite recorded 54 new highs and 100 new lows.

(Additional reporting by Johann M Cherian and Purvi Agarwal in

Bengaluru; Editing by Pooja Desai)