US STOCKS-Wall St retreats as Trump tests positive for COVID-19

* News could hurt Trump's campaigning ability - analysts
* U.S. jobs growth slows more than expected in September
* Banks track Treasury yields lower
* Airlines slip as stimulus deal remains elusive
* Indexes off: Dow 0.90%, S&P 0.87%, Nasdaq 1.17%

(Adds comments, updates prices)
By Sagarika Jaisinghani and Devik Jain
Oct 2 (Reuters) - Wall Street's main indexes fell on Friday
after two straight sessions of gains as news that President
Donald Trump had contracted COVID-19 stirred up political
uncertainty just weeks before the election.
Nine of the 11 major S&P sectors were down, but were off
session lows as data showing a slowdown in U.S. job growth in
September raised hopes that Washington would agree on a new
fiscal stimulus.
Energy .SPNY , the worst performing sector so far this
year, lost 1.5% on the back of a more than 3% drop in oil
prices, but utilities .SPLRCU and materials .SPLRCM edged
higher in morning trading.
"Markets have demonstrated an aversion to uncertainty, not
so much to one or the other candidate winning," said Roberto
Perli, head of global policy research at Cornerstone Macro in
Washington.
"However, markets are also paying attention to the
likelihood that another stimulus package will pass soon. If that
happens it could offset, at least in part, the uncertainty
generated by the COVID-19 news."
Meanwhile, the White House tried to reassure Americans that
Trump was still working from isolation after his tweet about him
and first lady Melania testing positive for COVID-19 rankled
global financial markets.
At 10:43 a.m. ET, the Dow Jones Industrial Average .DJI
was down 0.90%, the S&P 500 .SPX was down 0.87% and the Nasdaq
Composite .IXIC was down 1.17%.
The risk-off mood sparked a broad-based decline, with banks
.SPXBK tracking Treasury yields lower and tech mega-caps,
which generally tend to outperform at a time of economic
uncertainty, shedding more than 1%. US/
Tesla Inc TSLA.O slipped 2.6% even as it reported record
vehicle deliveries in the third quarter. Trading on Wall Street turned choppy last month, with the
S&P 500 snapping a five-month gaining streak, as economic data
indicated a long road to pre-pandemic levels and Congress
deliberated over the next round of fiscal stimulus. With a bipartisan deal eluding House Speaker Nancy Pelosi
and the White House, the U.S. House of Representatives on
Thursday approved a $2.2 trillion Democratic plan on fiscal aid,
but objections from top Republicans are likely to doom the plan
in the Senate. American Airlines AAL.O and United Airlines UAL.O , which
began laying off 32,000 workers after government funding program
expired this week, fell 2.2% and 2.6%, respectively.
"Despite the fact that positive news has been made of
ongoing talks between Mnuchin and Pelosi, we've been skeptical
that a breakthrough was possible prior to the election," said
Chris Zaccarelli, chief investment officer for Independent
Advisor Alliance in Charlotte, North Carolina.
The CBOE volatility index .VIX , known as Wall Street's
fear gauge, shot up to a one-week high.
Declining issues outnumbered advancers 2.65-to-1 on the NYSE
and 2.43-to-1 on the Nasdaq.
The S&P index recorded two new 52-week highs and one new
low, while the Nasdaq recorded 37 new highs and 22 new lows.