*

Initial claims for state unemployment benefits drop

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CarMax ( KMX ) falls to lowest in over five years

*

Investors await PCE data Friday

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Indexes: Dow down 0.4%, S&P 500 down 0.5%, Nasdaq down

0.5%

(Updates close with volume, share moves)

By Caroline Valetkevitch

NEW YORK Sept 25 (Reuters) - U.S. stocks ended

moderately lower on Thursday, with most S&P 500 sectors down as

economic data increased uncertainty over the outlook for

interest rate cuts from the Federal Reserve.

Data showed initial jobless claims dropped 14,000 to a

seasonally adjusted 218,000 for the week ended September 20.

Other data showed the U.S. economy grew faster than previously

estimated in the second quarter amid strong consumer spending

and business investment.

Also, Chicago Fed President Austan Goolsbee said on Thursday

he was uneasy with cutting rates too quickly, with inflation a

risk.

The comments and data follow the U.S. central bank's move

last week to lower rates by 25 basis points - its first cut

since December - after signs of weakness in the labor market. It

also gave indications of more rate cuts ahead. Investor

expectations of another 25 bps cut in the Fed's October meeting

are now at 83.4%, down from about 92% on Wednesday, according to

the CME FedWatch Tool.

"The economic data that's come out over the last day or two

is kind of confusing in that, in my mind, it calls into

question" how much the Fed may cut rates again and whether the

Fed needs to cut rates again this year, said Peter Tuz,

president of Chase Investment Counsel in Charlottesville,

Virginia.

Investors are bracing for Friday's release of the Personal

Consumption Expenditures price index, the Fed's preferred

inflation measure.

Most of the S&P 500 sectors ended lower, but energy

gained 0.9% and technology eked out a 0.03% increase

as shares of Intel ( INTC ) jumped 8.9%. The Wall Street Journal

reported, citing people familiar with the matter, that Intel ( INTC ) has

approached Taiwan Semiconductor Manufacturing Company ( TSM )

about investments in manufacturing or partnerships.

The Dow Jones Industrial Average fell 173.96 points,

or 0.38%, to 45,947.32, the S&P 500 lost 33.25 points, or

0.50%, to 6,604.72 and the Nasdaq Composite lost 113.16

points, or 0.50%, to 22,384.70.

Among decliners, CarMax ( KMX ) shares fell 20.1% after the

used-car retailer reported lower second-quarter profit.

In addition, shares of Accenture ( ACN ) were down 2.7% even

after the consulting firm reported revenue above expectations.

Investors are eager to hear soon from more companies on

their quarterly results, especially with valuations considered

high after the market's run of record highs recently.

"Historically we're certainly at the high end" of

valuations, said Rick Meckler, partner at Cherry Lane

Investments, a family investment office in New Vernon, New

Jersey. "One big positive is it seems like the government is

going to let big tech get bigger."

Next week brings the all-important monthly U.S. jobs report.

Monetary policymakers are not unanimous on the proper way

forward with rates, with Stephen Miran, President Donald Trump's

recent Fed appointee, continuing to push for accelerated policy

easing.

Earlier this week, Fed Chair Jerome Powell reiterated that

the U.S. central bank needs to balance inflation concerns with a

weakening job market in its coming interest rate decisions.

Declining issues outnumbered advancers by a 3.11-to-1 ratio

on the NYSE. There were 110 new highs and 109 new lows on the

NYSE.

On the Nasdaq, 1,166 stocks rose and 3,502 fell as declining

issues outnumbered advancers by a 3-to-1 ratio.

Volume on U.S. exchanges was 19.58 billion shares, compared with

the 17.99 billion average for the full session over the last 20

trading days.

(Additional reporting by Niket Nishant, Sukriti Gupta and Purvi

Agarwal in Bengaluru; Editing by Shilpi Majumdar and Aurora

Ellis)