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US STOCKS-Wall Street drops as the Fed pounds rate hike drum

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Megacap growth stocks fall against rise in yields

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Oil prices add to inflation woes post-OPEC+ output cut

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U.S. weekly jobless claims increase more than expected

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Indexes decline: Dow down 0.94%, S&P 0.74%, Nasdaq 0.38%

(Adds analyst comment, updates prices)

By Herbert Lash, Ankika Biswas and Shreyashi Sanyal

Oct 6 (Reuters) - Wall Street's major indexes slid further on Thursday as concerns mounted ahead of closely watched monthly nonfarm payrolls numbers that the Federal Reserve's aggressive interest rate stance will lead to a recession.

Before dropping further, markets briefly took comfort from data that showed an increase in weekly jobless claims as it raised hopes the Fed could ease the steady rate hikes it has been implementing since March - the fastest and highest in decades.

The equity market has been slow to acknowledge a consistent message from Fed officials that rates will go higher for longer until the pace of inflation is clearly slowing.

Chicago Fed President Charles Evans was the latest to spell out the central bank's outlook on Thursday, saying policymakers expect to deliver 125 basis points of rate hikes before year's end as inflation readings have been disappointing.

"The market has been slowly getting the Fed's message," said Jason Pride, chief investment officer for private wealth at Glenmede in Philadelphia.

"There's a likelihood that the Fed with further rate hikes pushes the economy into a recession in order to bring inflation down," Pride said. "We don't think the markets have fully picked up on this."

Data showed the number of Americans filing new claims for unemployment benefits rose more than expected last week, but the labor market remains tight even as demand begins to cool amid higher rates.

On Friday the nonfarm payrolls report on employment in September will help investors gauge whether the Fed alters its rate hiking plans.

Money markets are pricing in an 83% chance of a fourth straight 75 basis-point rate hike when policymakers meet on Nov. 1-2.

The benchmark 10-year Treasury yield initially moved lower before rising to a one-week high. Ten of the 11 major S&P 500 sectors fell, led by a 2.9% decline in real estate .

Energy was the sole gainer, rising 1.8%.

Tesla Inc fell 0.2% as Apollo Global Management Inc and Sixth Street Partners, which had been looking to provide financing for Elon Musk's $44 billion Twitter deal, are no longer in talks with the billionaire.

Alphabet Inc edged 0.4% higher after the launch of Google's new phones and its first smartwatch.

Oil prices rose, holding at three-week highs after the Organization of the Petroleum Exporting Countries plus its allies agreed to cut production targets by 2 million barrels per day (bpd), the largest reduction since 2020.

By 2:43 p.m. EDT, the Dow Jones Industrial Average fell 284.38 points, or 0.94%, to 29,989.49, the S&P 500 lost 27.85 points, or 0.74%, to 3,755.43 and the Nasdaq Composite dropped 42.38 points, or 0.38%, to 11,106.26.

Declining issues outnumbered advancing ones on the NYSE by a 2.05-to-1 ratio; on Nasdaq, a 1.34-to-1 ratio favored decliners.

The S&P 500 posted three new 52-week highs and 29 new lows; the Nasdaq Composite recorded 30 new highs and 97 new lows. (Reporting by Herbert Lash in New York Additional reporting by Ankika Biswas and Shreyashi Sanyal in Bengaluru Editing by Arun Koyyur and Matthew Lewis)