US STOCKS-Wall St drops as jobs data leaves Fed-watchers hanging
* Jobs data transmits mixed message to Fed watchers
* Caterpillar falls after broker downgrade
* Microsoft drags down S&P 500
* Indexes down: Dow 1.97 pct, S&P 1.85 pct, Nasdaq 1.42 pct (Adds detail on jobs data, comment, updates prices )
By Noel Randewich
Sept 4 (Reuters) - U.S. stock indexes dropped almost 2 percent on Friday as a mixed August jobs report did little to quell investor uncertainty about whether the Federal Reserve will increase interest rates this month.
Trepidation about the first U.S. rate hike in almost a decade added to worries among investors already on edge about a stumbling Chinese economy and a recent market selloff.
"Markets are confused. It was an okay jobs report, but there's worry about China going into the weekend," said John Augustine, chief investment officer, Huntington Trust in Columbus, Ohio.
Nonfarm payrolls increased 173,000 last month, fewer than the 220,000 that economists polled by Reuters had expected. But the unemployment rate dropped to 5.1 percent, its lowest in more than seven years, and wages accelerated. Many investors viewed those data points as contradictory signals about the urgency to increase interest rates. Continuación...