US STOCKS-Wall Street drops 2% on U.S. growth concerns

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* Indexes down: Dow 2.12%, S&P 2.08%, Nasdaq 1.92%
* Sept. U.S. private payrolls grow slower than expected
* Ford falls as quarterly auto sales drop
* Activision Blizzard down on Bernstein rating cut
* Lennar up on better-than-expected profit

(Updates to early afternoon)
By Medha Singh and Arjun Panchadar
Oct 2 (Reuters) - Wall Street's main indexes were on course
for their sharpest drop in nearly six weeks on Wednesday as a
clutch of recent data, including a report on private sector
hiring, suggested that trade tensions were taking a toll on the
U.S. economy.
All the 11 major S&P sectors were in the red, with
technology shares .SPLRCT taking the biggest hit after
tumbling 2.4%. Sectors, including industrial .SPLRCI ,
materials .SPLRCM , energy .SPNY and financials .SPSY , also
shed more than 2%.
The ADP National Employment Report showed private payrolls
growth in August was not as strong as previously estimated, and
said "businesses have turned more cautious in their hiring,"
with small enterprises becoming "especially hesitant."
The report comes a day after U.S. factory activity
contracted to its lowest level in more than a decade, triggering
sharp falls in U.S. stocks indexes.
The recent set of weak data has shaken investor faith in the
strength of the domestic economy, which had shown relative
resilience in the face of slowing global growth and was a key
reason for a rally in the benchmark index this year.
"People have been anticipating a bear market for years and
they are very anxious and so any number like the ADP number is
amplified in the volatility on the downside," said Tom Plumb,
chief investment officer at Plumb Funds in Madison, Wisconsin.
The focus is now on the Labor Department's more
comprehensive jobs report due on Friday for further clues on the
health of the U.S. economy.
"The hardest part to figure out is whether trade and the
business recession will impact consumer confidence and that
leads to a very different scenario," said Phil Blancato, chief
executive officer of Ladenburg Thalmann Asset Management in New
York. "So far it hasn't happened ... the consumer has held up."
The S&P 500 .SPX and the Dow .DJI slipped below their
100-day moving averages for the first time in about a month on
Wednesday, seen as a strong technical support level that could
presage further losses.
The benchmark index is now about 5% below its all-time high
hit in July, after coming within striking distance of the mark
two weeks ago.
At 13:02 ET (1702 GMT), the Dow Jones Industrial Average
.DJI was down 563.16 points, or 2.12%, at 26,009.88 and the
S&P 500 .SPX was down 61.04 points, or 2.08%, at 2,879.21. The
Nasdaq Composite .IXIC was down 152.02 points, or 1.92%, at
7,756.66.
The Cboe Volatility Index, or VIX .VIX , an options-based
gauge of investor anxiety, rose 2.50 points to 21.06, its
highest in about a month.
Activision Blizzard Inc ATVI.O dropped 3.3% after
Bernstein downgraded the videogame maker's shares to "market
perform".
Ford Motor Co F.N shares fell 4.3% after the carmaker
reported a fall of about 5% in U.S. auto sales for the third
quarter. Shares of General Motors Co GM.N dipped 4.3% ahead of
its quarterly auto sales report. Among bright spots, homebuilder Lennar Corp LEN.N rose
2.4% after the company reported a better-than-expected profit as
cheaper mortgage rates led to higher demand for its homes.
Johnson & Johnson JNJ.N gained 1.2% after the drugmaker
said it will pay $20.4 million to settle claims by two Ohio
counties, allowing it to avoid an upcoming federal trial seeking
to hold the industry responsible for the nation's opioid
epidemic. Declining issues outnumbered advancers for a 4.61-to-1 ratio
on the NYSE and a 3.22-to-1 ratio on the Nasdaq.
The S&P index recorded three new 52-week highs and 12 new
lows, while the Nasdaq recorded four new highs and 167 new lows.

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