US STOCKS-Wall St opens mixed after economic data; Middle East tensions in focus

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Weekly jobless claims at 225,000

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US service sector activity accelerates to 1-1/2-year high

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Levi Strauss tumbles after saying it is exploring unit sale

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East, Gulf coast workers' strike enters third day

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Indexes: Dow down 0.32%, S&P 500 up 0.10%, Nasdaq up 0.45%

(Updated at 10:07 a.m. ET/1407 GMT)

By Johann M Cherian and Purvi Agarwal

Oct 3 (Reuters) -

Wall Street's main indexes were mixed on Thursday after data showed strong service activity in the world's largest economy, while cautious investors watched for any escalation in the Middle East conflict.

The benchmark S&P 500 pared losses after the Institute for Supply Management survey showed service sector activity, which makes up the majority of the U.S. economy, stood at 54.9 in September, compared with an estimate of 51.7, according to economists Reuters polled.

However, separate data showed weekly jobless claims rose marginally last week. Next up is Friday's nonfarm payrolls report for September.

Odds of a 25-basis-point cut at the Federal Reserve's November meeting now stand at 64.9%, up from 50.7% a week ago, according to the CME Group's FedWatch Tool.

The Dow Jones Industrial Average fell 137.01 points, or 0.32%, to 42,059.51, the S&P 500 gained 5.62 points, or 0.10%, to 5,716.01, and the Nasdaq Composite gained 83.86 points, or 0.45%, to 18,006.65.

Eight of the 11 S&P 500 sectors opened lower. However, infotech shares were the biggest gainers, with a 1.3% rise.

Rate-sensitive heavyweights were mixed, with Amazon.com (AMZN) down 0.8%, Apple (AAPL) losing 0.1%, while Nvidia (NVDA) rose 4.5%.

Yields on two-year and 10-year Treasury bonds inched higher and were last up 3.68% and 3.8%, respectively.

Investors have been wary over the last two sessions as they contemplated the scale of Israel and the United States' response to Iran's recent attack on Israel. The CBOE volatility index, Wall Street's fear gauge, hovered at more than three-week highs at 19.22.

"We'll see some cautiousness due to two factors: the war headlines that continue to impact the equities market and tomorrow's unemployment data," said Peter Cardillo, chief market economist, Spartan Capital Securities.

"We'll probably have a mixed market session today as investors' cautiousness rises ahead of tomorrow's key macro data of the month."

Investors will also assess comments from Fed policymakers Raphael Bostic and Neel Kashkari later in the day.

U.S. stocks have rallied for much of the year, with the benchmark S&P 500 confirming a bull rally and logging gains in eight of the previous nine months on expectations of lower borrowing costs. Tech stocks led the charge, with AI integration expected to boost their earnings.

Meanwhile, a workers' strike on the East and Gulf coasts entered its third day. Morgan Stanley economists said a prolonged stoppage could raise consumer prices, with food prices likely to react first.

Among other movers, oil stocks such as Chevron (CVX) and Exxon Mobil (XOM) edged higher after four sessions of gains, as crude prices rose more than 2%.

Levi Strauss slid 7.2% after the company said it was considering a sale of its underperforming Dockers brand and forecast fourth-quarter revenue below expectations.

Constellation Brands (STZ) dropped 2.1% after the beer maker maintained its sales and profit forecast for fiscal year 2025.

Declining issues outnumbered advancers by a 2.61-to-1 ratio on the NYSE, and by a 1.57-to-1 ratio on the Nasdaq.

The S&P 500 posted 15 new 52-week highs and two new lows, while the Nasdaq Composite recorded 31 new highs and 60 new lows. (Reporting by Johann M Cherian and Purvi Agarwal in Bengaluru; Editing by Pooja Desai)