US STOCKS-Wall St tumbles; S&P below 50-day moving average

* Investors fret over Argentina default fallout

* Exxon, Whole Foods both fall after results

* Jobless claims rise more than expected in latest week; wages rise

* Indexes down: Dow 1.2 pct, S&P 1.5 pct, Nasdaq 1.9 pct (Updates to midday trading)

By Ryan Vlastelica

NEW YORK, July 31 (Reuters) - U.S. stocks slumped in a broad decline on Thursday, with the S&P 500 falling below a key technical level and erasing its gains for the month as concerns mounted over the strength of overseas economies and ongoing tensions with Russia.

The benchmark index, falling in its biggest one-day decline since April 10, moved solidly under its 50-day moving average, a level it has not closed below since April 15, though it has dipped under it since then. The moving average is viewed as a sign of short-term momentum, and selling accelerated after the level was breached.

All ten primary S&P 500 sectors were down on the day, with energy the biggest decliner with a drop of 1.8 percent. Almost 90 percent of stocks traded on the New York Stock Exchange fell, while 82 percent of Nasdaq-listed shares were lower. The CBOE Volatility index rose 20 percent to 15.98, its highest level since April, though well under its historical average of 20.

"We've been extended from the 50-day moving average and are correcting those excesses," said Bruce McCain, chief investment strategist at Key Private Bank in Cleveland, Ohio. "The levels we were at were pretty optimistic given how little clarity we had about global economic growth going forward."

Portugal's Banco Espirito Santo slumped almost 40 percent to an all-time low as its hopes of raising capital without state aid suffered a major blow after massive losses.

Russia banned soy imports from Ukraine and may restrict Greek fruit and U.S. poultry, Russian news agencies reported on Thursday, in what could be responses to new Western sanctions.

Separately, Argentina defaulted for the second time in 12 years. Investors had hoped for a midnight deal with holdout creditors, but the plan fell through. Even a short default will raise companies' borrowing costs, add to pressure on the peso, drain dwindling foreign reserves and fuel one of the world's highest inflation rates.

"The default ties back to the specter of what's going on in Portugal, and it all reminds people that the euro-zone crisis from years ago may not be fully resolved," McCain said.

The Dow Jones industrial average fell 205.13 points or 1.22 percent, to 16,675.23, the S&P 500 lost 29.52 points or 1.5 percent, to 1,940.55 and the Nasdaq Composite dropped 82.63 points or 1.85 percent, to 4,380.27.

The losses erased the month's gains for major indexes, with the Dow currently off 0.9 percent for July and the S&P off 1 percent, both snapping a five-month streak of gains. The Nasdaq fell 0.6 percent. At current levels, the S&P is about 2.4 percent below its all-time closing high.

Weak U.S. data contributed to the bearish tone. Jobless claims rose more than expected in the latest week, and the Chicago Purchasing Managers Index unexpectedly fell in July to its lowest since June 2013.

Dow component Exxon Mobil Corp's second-quarter earnings beat expectations, but shares fell 2.3 percent to $100.87.

Late Wednesday, Whole Foods Markets Inc cut its 2014 forecasts for a fourth time. Shares (Frankfurt: DI6.F - news) fell 3.7 percent at $37.68. (Editing by Bernadette Baum and Nick Zieminski)