By Johann M Cherian and Purvi Agarwal

(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 and Lockheed Martin 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. [US/]

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 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.

(Reporting by Johann M Cherian, Purvi Agarwal and Saqib Ahmed; Editing by Maju Samuel)

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