(For a Reuters live blog on U.S., UK and European stock

markets, click or type LIVE/ in a news window)

*

US labor growth misses expectations; unemployment rate

rises

*

Bets up on a half-percentage-point Fed rate cut in

September

*

Consumer Discretionary is worst-hit index

*

Chevron ( CVX ) down after Q2 profit miss

*

Indexes down: Dow 2.07%, S&P 2.07%, Nasdaq 2.38%

(Updated at 11:51 a.m. ET/1551 GMT)

By Ankika Biswas and Shubham Batra

Aug 2 (Reuters) - The Nasdaq Composite was on track to

fall into a correction in a Wall Street battering after Friday's

weak jobs numbers deepened worries of a slowdown in the U.S.

economy, while Amazon ( AMZN ) and Intel's ( INTC ) downbeat forecasts worsened

investor sentiment.

The tech-laden index slumped over 10% from its July

peak, putting it on track to confirm it is in a correction after

concerns arose about pricey Big Tech valuations and a cooling

economy.

"This isn't that unusual as we passed the economic torch

from the perception of growth to needing government intervention

with lower interest rates to stabilize the economy," said Tom

Plumb, chief executive and portfolio manager at Plumb Funds.

"As we go through the fall and start to see some impact

of the Fed taking actions (on rate cuts), we can see a recovery

from current levels to well over 18,000 points by year-end."

At 11:51 a.m. the Dow Jones Industrial Average

fell 833.37 points, or 2.07%, to 39,514.60, the S&P 500

lost 112.95 points, or 2.07%, to 5,333.73 and the Nasdaq

Composite lost 409.46 points, or 2.38%, to 16,784.69.

The S&P 500 hit its lowest level since June 5. Both the

benchmark index and the blue-chip Dow were on track for their

biggest two-day slides in nearly two years.

The nonfarm payrolls report showed the U.S. job market

slowed sharply last month, while a separate reading revealed new

orders for U.S.-manufactured goods fell more than expected in

June, deepening fears about the health of the economy sparked by

Thursday's weak manufacturing data.

With fresh evidence of the labor market weakening, traders

are now betting the U.S. Federal Reserve will deliver a

half-percentage-point rate cut in September, versus the 25-bps

cut expected before the data.

"Now the question isn't will they cut in September, but by

how much. With the Sahm rule officially being triggered, both

the talk of recession and criticism of the Fed will grow

louder," said Jay Woods, chief global strategist, Freedom

Capital Markets.

The Sahm rule is a historically accurate early indicator of

recession.

The small-cap Russell 2000 index slumped 4% to hit a

nearly one-month low and was set for its biggest two-day slide

since June 2022.

Amazon.com ( AMZN ) fell 9% after it reported slowing online

sales growth in the second quarter and said cautious consumers

were seeking cheaper purchase options.

Intel ( INTC ) tumbled 26% after forecasting third-quarter

revenue below estimates and suspending its dividend, starting in

the fourth quarter.

Other chip stocks were also set to extend Thursday's

losses. Nvidia ( NVDA ) and Broadcom ( AVGO ) lost 2% each,

while Micron Technology ( MU ) and Arm Holdings were

down around 7% each.

The Philadelphia SE Semiconductor Index hit a

three-month low, set for its biggest two-day slide since March

2020.

Bucking the negative trend in megacaps, Apple ( AAPL ) rose

2.3% after posting better-than-expected third-quarter iPhone

sales and forecasting more gains, betting on AI to attract

buyers.

Disquiet about the dominance of the "Magnificent Seven"

group of stocks persists as earnings from most of the Big Tech

companies have failed to enthuse investors, underlining worries

about their valuations being inflated.

All the 11 S&P 500 sub-indexes slumped, with the Consumer

Discretionary sector leading losses and on track for

its biggest two-day drop since June 2022.

Major U.S. banks also fell for the second straight day on

recession concerns, with the S&P 500 Financials and

Banks indexes losing 3% and 4.7%, respectively.

Wall Street's "fear gauge" breached the long-term

average level of 20 points to touch its highest mark since last

March.

Among other movers, Snap lost 24.7% after

forecasting current-quarter results below expectations.

Chevron Corp ( CVX ) fell 3.5% after the oil giant missed

estimates for second-quarter profit.

Declining issues outnumbered advancers by a 4.23-to-1

ratio on the NYSE, and by a 5.74-to-1 ratio on the Nasdaq.

The S&P 500 posted 57 new 52-week highs and 15 new lows,

while the Nasdaq Composite recorded 27 new highs and 248 new

lows.