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US job openings rebound in August

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Port strike halts half of ocean shipping

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Indexes down: Dow 0.2%, S&P 500 0.8%, Nasdaq 1.3%

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

By Caroline Valetkevitch

NEW YORK, Oct 1 (Reuters) -

U.S. stocks fell, with the Nasdaq losing more than 1%, on

Tuesday as investors grew more cautious after Iran fired

missiles at Israel.

Iran launched the salvo of ballistic missiles in retaliation

for Israel's campaign against Tehran's Hezbollah allies. In

response, U.S. President Joe Biden directed the U.S. military to

aid Israel's defense and shoot down missiles aimed at Israel,

the White House National Security Council said.

While the broader market fell, shares of energy companies

rose along with oil prices. Exxon Mobil ( XOM ) was up 2.2%.

Defense stocks also rose, including Northrop Grumman ( NOC )

and Lockheed Martin ( LMT ). The S&P 500 aerospace and

defense index climbed more than 1% to a record

high. Utilities were up 0.7%.

Airline shares fell, including Delta Air Lines ( DAL ),

which was down 1%.

"This highlights the circumstance of this market in the fact

that there are a myriad of risks out there, whether that's

slowing employment in the U.S., the geopolitical tensions in

Ukraine, the Middle East," said Walter Todd, chief investment

officer at Greenwood Capital in Greenwood South Carolina.

"And the market seems very mispriced for any flare-up of

any of those risks. ... It's vulnerable to shocks like this."

On Monday, the three major U.S. indexes scored strong

gains for September and for the quarter.

The Dow Jones Industrial Average fell 83.68

points, or 0.2%, to 42,246.47. The S&P 500 lost 43.34

points, or 0.75%, at 5,719.14 and the Nasdaq Composite

dropped 244.42 points, or 1.34%, to 17,944.75.

CBOE's market volatility index, Wall Street's fear gauge,

jumped 2 points to 18.74 after hitting a three-week high

of 20.73 earlier in the session.

Data released early on Tuesday showed U.S. job openings

rebounded in August, while the Institute for Management Supply's

(ISM) report showed manufacturing activity stood at 47.2 in

September, versus estimates of 47.5.

Investors were also cautious ahead of U.S. jobless claims

data on Thursday and monthly payrolls on Friday.

Traders are pricing in a 62.2% probability that the

Federal Reserve will lower rates by 25 bps at its November

meeting, the CME Group's FedWatch Tool showed. Bets on a bigger

50 bps cut stand at 37.8%.

Investors also were keeping an eye on a port strike on the

East Coast and the Gulf Coast, halting the flow of about half

the nation's ocean shipping.

The strike that began on Tuesday is not expected to

cause global supply problems as deep or severe as during the

COVID-19 pandemic, but it still creates more economic

uncertainty for

Fed policymakers

to assess.

Declining issues outnumbered advancers on the NYSE by a

1.36-to-1 ratio; on Nasdaq, a 2.53-to-1 ratio favored decliners.

The S&P 500 posted 51 new 52-week highs and two new

lows; the Nasdaq Composite recorded 60 new highs and 118 new

lows.

(Additional reporting by Johann M Cherian and Purvi Agarwal in

Bengaluru and and Lewis Krauskopf in New York; Editing by Maju

Samuel and Richard Chang)