US STOCKS-S&P 500, Dow tumble as Wall Street heads for monthly losses

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* S&P 500 set to snap seven-month winning streak

* Indexes down: Dow 1.25%, S&P 0.86%, Nasdaq 0.30% (Adds comment, details; updates prices)

By Devik Jain and Ambar Warrick

Sept 30 (Reuters) - The S&P 500 and the Dow tumbled on Thursday as concerns over economic growth and a possible government shutdown saw Wall Street headed for a steep monthly drop, while losses in the Nasdaq were mitigated by major technology stocks.

A batch of mixed economic data spurred large swings in the markets, as investors weighed a slight upward revision in second-quarter economic growth against a bigger-than-expected rise in weekly jobless claims.

Losses in major financial stocks saw the Dow Jones largely lag its peers, as the rise in jobless claims cast some doubt over the Federal Reserve's plan to tighten policy early.

All the major indexes were set for steep monthly drops with the S&P 500 index on course to snap its seven-month winning streak, due to worries about higher pricing pressures, fallout from China Evergrande's potential default and wrangling over the U.S. debt ceiling.

In a hearing before the U.S. House Financial Services Committee on Thursday, Fed Chair Jerome Powell said the central bank finds itself in a difficult situation in regards to tension between inflation and employment.

"You got Powell talking with more concern on inflation as well. So it does look like eventually they're going to have to start to taper," said Dennis Dick, a trader at Bright Trading LLC.

"It's just a trading environment where people are locking in short-term day-trading profits ... because a lot of money managers are concerned that the next big move could actually be down."

All the 11 major S&P sectors fell, with half of them dropping more than 1%.

Technology stocks fell the least among their peers, as investors favored relatively stable sectors. A dip in Treasury yields from a three-month high also helped limit losses in the sector.

Excluding Netflix Inc, rate-sensitive FAANG stocks lost a combined $415 billion in value this month after the Fed's hawkish shift on monetary policy sparked a rally in Treasury yields and prompted investors to move into sectors that stand to benefit the most from an economic revival.

The streaming video pioneer is set to add nearly 7% in September.

Energy stocks were still headed for their best monthly performance since February, while the financials sector was on track for its sixth straight quarterly gain.

Meanwhile, Democratic divisions were imperiling President Joe Biden's agenda to invest in infrastructure, expand social services and address climate change as the U.S. Congress scheduled votes on Thursday to avert a government shutdown.

At 12:21 p.m. ET, the Dow Jones Industrial Average was down 428.29 points, or 1.25%, at 33,962.43, the S&P 500 was down 37.31 points, or 0.86%, at 4,322.15, and the Nasdaq Composite was down 44.10 points, or 0.30%, at 14,468.34.

For the third quarter, the S&P 500 was on track for its sixth straight quarterly gain, outperforming the other two major indexes.

Declining issues outnumbered advancers for a 2.08-to-1 ratio on the NYSE and a 1.12-to-1 ratio on the Nasdaq.

The S&P index recorded four new 52-week highs and two new lows, while the Nasdaq recorded 32 new highs and 125 new lows.

(Reporting by Devik Jain, Ambar Warrick and Medha Singh in Bengaluru; Editing by Saumyadeb Chakrabarty and Shounak Dasgupta)