US STOCKS-Wall St drops on Apple weakness, dollar concerns

* Indexes off: Dow 1.34 pct, S&P 1.35 pct, Nasdaq 1.65 pct

By Chuck Mikolajczak

NEW YORK, Sept 25 (Reuters) - U.S. stocks were sharply lower moving into the latter stages of trading on Thursday, weighed down by a drop in Apple (NasdaqGS: AAPL - news) shares, as each of the major indexes fell more than one percent and the S&P broke below a key support level.

Apple shares, down 3 percent to $98.69, were the biggest drag on both the S&P 500 and Nasdaq 100 indexes, after it withdrew an update to its new operating system.

In broad selling, each of the ten major S&P sectors was in negative territory, with the S&P technology index the worst performer, down 1.9 percent. The S&P 500 also broke through its 50-day moving average around 1,976, a key support level which the index had been able to rebound off of when recently tested.

Adding to concerns for investors was the continued strength of the dollar and the possible impact on corporate earnings. The greenback is up 0.2 percent on the session against a basket of major currencies and up 6.9 percent for the quarter, its biggest quarterly increase in six years.

"I don't get too worried about dollar strength. Of course, the hard part is this is kind of a historic sized move here, so certainly individual companies have to worry perhaps about the impact," said Bill Stone, chief investment strategist at PNC Wealth Management in Philadelphia.

"It's pretty easy to say you should expect that to roll through some of the earnings reports to some extent, because you don't often see those kind of moves."

Durable goods orders dropped 18.2 percent in August, largely in-line with expectations, while initial claims for state unemployment benefits increased 12,000 to a seasonally adjusted 293,000 for the week ended Sept. 20, below the 300,000 forecast, indicating an acceleration in job growth for the month.

The Dow Jones industrial average was falling 229.76 points, or 1.34 percent, to 16,980.3, the S&P 500 was losing 26.93 points, or 1.35 percent, to 1,971.37 and the Nasdaq Composite was dropping 75.32 points, or 1.65 percent, to 4,479.91.

All of the major indexes were on track for their worst drop since July 31.

The largest percentage gainer on the New York Stock Exchange was Cone Midstream Partners, rising 35.45 percent, while the largest percentage decliner was OMNOVA Solutions (NYSE: OMN - news) , down 15.70 percent.

Declining issues were outnumbering advancing ones on the NYSE by 2,530 to 477, for a 5.30-to-1 ratio on the downside; on the Nasdaq, 2,153 issues were falling and 494 advancing for a 4.36-to-1 ratio favoring decliners.

The benchmark S&P 500 index was posting 6 new 52-week highs and 9 new lows; the Nasdaq Composite was recording 18 new highs and 140 new lows. (Reporting by Chuck Mikolajczak; Editing by Nick Zieminski)