US STOCKS-Indexes fall at least 1% as data adds to rate worries

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US job openings unexpectedly rise in August

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Amazon, Microsoft down as UK regulator push for probe

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Indexes down: Dow 1.5%, S&P 500 1.6%, Nasdaq 2.1%

(Updates to 1415 EDT/1815 GMT, adds NEW YORK dateline)

By Caroline Valetkevitch

NEW YORK, Oct 3 (Reuters) - Major U.S. stock indexes fell at least 1% Tuesday afternoon, with the Dow dipping into negative territory for the year, as economic data underscored the view the Federal Reserve may need to keep interest rates high.

The CBOE volatility index, Wall Street's "fear gauge," hit its highest since late May.

Data showed U.S. job openings unexpectedly increased in August, fueling worries about a tight labor market ahead of Friday's key U.S. monthly jobs report.

Investors continue to closely watch benchmark Treasury yields, which hit 16-year highs on Tuesday.

"The scenario that most investors were assuming is the Fed would need to ultimately cut short-term rates, and we would return to a favorable interest rate environment," said Rick Meckler, partner at Cherry Lane Investments, a family investment office in New Vernon, New Jersey.

"But investors are seeing a different scenario now - higher rates for longer."

Higher borrowing costs are a negative for businesses and consumers.

All but one S&P 500 sector - utilities - were lower on the day, led by more than 2% declines in consumer discretionary and technology. Growth companies tend to be among the hardest hit by rising yields.

The Dow Jones Industrial Average fell 496.25 points, or 1.48%, to 32,937.1, the S&P 500 lost 69.39 points, or 1.62%, at 4,219 and the Nasdaq Composite dropped 277.28 points, or 2.08%, to 13,030.49.

Atlanta Fed President Raphael Bostic said there is no urgency for the central bank to raise its policy rate again, but it will likely be "a long time" before rate cuts are appropriate. Cleveland Fed President Loretta Mester said she is open to raising rates again, potentially at the bank's next meeting. Amazon.com and Microsoft dropped after Reuters reported British media regulator Ofcom will push for an antitrust investigation into the companies' dominance of the UK cloud computing market.

Investors are getting ready for U.S. companies in the coming weeks to begin reporting on the last quarter, with some hoping the results could provide some positive news again for the market.

While the Dow is down slightly for the year so far, the Nasdaq remains up about 24% since Dec. 31 after an artificial intelligence-driven rally.

Declining issues outnumbered advancers on the NYSE by a 6.94-to-1 ratio; on Nasdaq, a 3.86-to-1 ratio favored decliners.

The S&P 500 posted one new 52-week high and 62 new lows; the Nasdaq Composite recorded 13 new highs and 390 new lows. (Additional reporting by Ankika Biswas and Shashwat Chauhan in Bengaluru Editing by Vinay Dwivedi, Maju Samuel and Richard Chang)