* Chinese factory activity shrinks for 14 straight months
* Pfizer higher after reporting rise in quarterly profit
* Volatility index rises
* Indexes down: Dow 0.8 pct, S&P 0.9 pct, Nasdaq 1.0 pct (Updates to late afternoon)
By Caroline Valetkevitch
May 3 (Reuters) - U.S. stocks fell on Tuesday after weak economic data in China and Europe reignited worries about global growth, while oil prices dropped for a second day, dragging down energy shares.
Activity in China's factories shrank for 14 straight months in April as demand stagnated, a private survey showed. Britain's manufacturing output also unexpectedly shrank last month to its lowest level in three years.
U.S. oil prices settled down 2.5 percent as rising output from the Middle East renewed concerns about global oversupply. The S&P energy index, down 2.4 percent, led declines in the benchmark index.
"Equities are in search of a catalyst, and at the moment lack one," said Mark Luschini, chief investment strategist at Janney Montgomery Scott in Philadelphia.
At 2:57 p.m., the Dow Jones industrial average was down 134.78 points, or 0.75 percent, to 17,756.38, the S&P 500 had lost 18.09 points, or 0.87 percent, to 2,063.34 and the Nasdaq Composite had dropped 45.77 points, or 0.95 percent, to 4,771.83.
The CBOE Volatility index, often called Wall Street's fear index, rose 6.6 percent.
Monthly U.S. payrolls are due on Friday. Last week, U.S. data showed tepid growth in first-quarter gross domestic product and a softening in the Fed's preferred measure of inflation.
A bright spot for Wall Street was in healthcare, with Pfizer up 2.9 percent at $33.74 after reporting a rise in quarterly revenue.
Shares of drugmaker Mallinckrodt Plc were up 6.6 percent at $64.69 following its results.
Declining issues outnumbered advancing ones on the NYSE by 2,302 to 689, for a 3.34-to-1 ratio on the downside; on the Nasdaq, 2,046 issues fell and 760 advanced for a 2.69-to-1 ratio favoring decliners.
The S&P 500 posted 12 new 52-week highs and 3 new lows; the Nasdaq recorded 28 new highs and 43 new lows.
Additional reporting by Tanya Agrawal; Editing by Anil D'Silva and Nick Zieminski