US STOCKS-Wall Street hit by Saudi attacks; energy stocks temper losses

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* Dow set to snap 8-day winning streak
* Energy sector eyes biggest one-day jump since Jan. 4
* Airlines, cruise operators fall on cost concerns
* United Auto Workers call for strike on GM; shares fall
* Indexes down: Dow 0.56%, S&P 0.42%, Nasdaq 0.40%

(Updates to early afternoon)
By Medha Singh and Ambar Warrick
Sept 16 (Reuters) - U.S. stocks fell on Monday on global
growth worries after weekend attacks on Saudi Arabia's crude
facilities hit 5% of the world's supply, but a sharp surge in
crude prices lifted beaten-down energy stocks and kept losses in
check.
The attack on the world's biggest oil exporter sent oil
prices up more than 20% before they eased off their peaks as
various nations said they would tap emergency reserves to ensure
stable supplies. O/R
The S&P 500 energy .SPNY , one of the worst performing
sectors so far this year, soared 3.15%, looking at its best
one-day gain since Jan. 4. Shares of Apache Corp APA.N ,
Marathon Oil Corp MRO.O and Hess Corp HES.N jumped between
10% and 13% and were the leading gainers on the benchmark index.
"The oil spike - higher prices globally - could slow world
spending on items other than oil and that's the main concern,"
said Rick Meckler, partner at Cherry Lane Investments, a family
investment office in New Vernon, New Jersey.
Market spotlight shifted to the drone attacks from this
week's centerpiece, the U.S. Federal Reserve's two-day monetary
policy meeting where expectations of a quarter point interest
rate cut remain high.
Anticipation of higher fuel costs drove down shares of
airlines and cruise line operators with the S&P 1500 airlines
.SPCOMALI shedding 2.20% while Carnival Corp CCL.N fell
2.8%.
Retail stocks .SPXRT lost 1.38% and were among the biggest
drags on the S&P 500.
"The drone strike in Saudi has had an impact on how
investors are looking at the security and stability of the
global energy supply chain and is fueling a degree of risk
reassessment," said Peter Kenny, founder of Kenny's Commentary
LLC and Strategic Board Solutions LLC in New York.
Shares of defense companies Raytheon RTN.N , Lockheed
Martin Corp LMT.N , Northrop Grumman Corp NOC.N rose at least
2%. J.P. Morgan upgraded Raytheon shares to "overweight".
At 12:57 p.m. ET, the Dow Jones Industrial Average .DJI
was down 151.30 points, or 0.56%, at 27,068.22, the S&P 500
.SPX was down 12.58 points, or 0.42%, at 2,994.81. The Nasdaq
Composite .IXIC was down 32.63 points, or 0.40%, at 8,144.08.
Nine of the 11 major S&P sectors were trading lower.
Investors' flight to safety pulled the U.S. benchmark
10-year Treasury bond yields US10YT=RR down from their
multi-week highs, sending the interest-rate sensitive bank
sub-sector .SPXBK 0.72% lower. US/
Wall Street's more than a decade-long rally continues to
hinge on whether the Fed will keep cutting interest rates and on
the progress in U.S.-China trade talks. The recent easing in
trade tensions has brought the benchmark S&P 500 .SPX about 1%
below its record high.
Among other movers, General Motors Co GM.N fell 4.1% after
the United Auto Workers went on strike on Sunday, the first
nationwide strike at GM in 12 years. Advancing issues outnumbered decliners for a 1.09-to-1 ratio
on the NYSE and a 1.18-to-1 ratio on the Nasdaq.
The S&P index recorded five new 52-week highs and one new
low, while the Nasdaq recorded 41 new highs and 22 new lows.