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White House: Iran preparing to launch attack on Israel

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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 0.31%, S&P 500 0.97%, Nasdaq 1.72%

(Updated at 11:59 a.m. ET/1559 GMT)

By Johann M Cherian and Purvi Agarwal

Oct 1 (Reuters) - Wall Street's main indexes took a

beating on Tuesday as reports of escalating tensions in the

Middle East made investors sell riskier assets, with the

benchmark S&P 500 hitting its lowest in over a week.

A White House official said that the United States is

actively supporting preparations to defend Israel, on

indications that Iran is preparing to imminently launch a

ballistic missile attack against Israel.

The Dow Jones Industrial Average fell 133.26 points,

or 0.31%, to 42,196.89, the S&P 500 lost 55.91 points, or

0.97%, to 5,706.57 and the Nasdaq Composite lost 312.63

points, or 1.72%, to 17,876.54.

Eight of the 11 S&P 500 sectors trended lower, although a

near 4% spike in crude prices aided a 1.8% gain on the energy

sector.

Defense stocks such as Northrop Grumman ( NOC ) and

Lockheed Martin ( LMT ) jumped 4.3% and 3.8% respectively, that

helped a 1.3% rise in the broader defense index. The Dow

Jones Transport Average tracking airline stocks fell

1.3%.

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

jumped 2.23 points to 18.85 after hitting a three-week

high of 20.73 earlier in the session.

"The initial market reaction to the (Middle East) news

has been pretty much exactly as one would have expected, with a

knee-jerk risk-off vibe sweeping across the board," said Michael

Brown, research strategist at Pepperstone.

"Markets are likely to display an incredibly high

sensitivity to incoming geopolitical news flow in the coming

hours."

Investors flocked to safe-haven pockets such as

utilities that gained 0.6% and Treasury bonds that

inched higher across the board.

Meanwhile, a Labor Department survey showed 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.

Traders are pricing in a 62.2% probability of a 25 bps

reduction at the November meeting as per the CME Group's

FedWatch Tool. The ones of a bigger 50 bps stand at 37.8%.

Investors will also parse through comments from Fed

presidents Raphael Bostic and Thomas Barkin among others after

markets close.

Their comments will follow Chair Jerome Powell's at a

conference on Monday, where he reiterated that the Fed is likely

to reduce borrowing costs by an additional 50 basis points by

year-end, based on data that pointed to robust consumer spending

and gross domestic income.

Wall Street's three main indexes closed September

higher, bucking a historical trend where equities' performance

have been weak on average during the month. The benchmark S&P

500 and the blue-chip Dow notched their fifth

straight month in gains and closed near record highs in the

previous session.

Markets also monitored a port strike on the East Coast and

the Gulf Coast halting the flow of about half the nation's ocean

shipping.

Retailers account for half of all container shipping volumes

and shares of Costco, Walmart ( WMT ) were down 1% and

flat, respectively.

Declining issues outnumbered advancers by a 1.45-to-1 ratio

on the NYSE and by a 2.6-to-1 ratio on Nasdaq.

The S&P 500 posted 43 new 52-week highs and one new low,

while the Nasdaq Composite recorded 50 new highs and 100 new

lows.