Lackluster data pulls Wall Street from record levels

By Yashaswini Swamynathan

REUTERS - U.S. stocks were lower on Friday afternoon, a day after closing at record highs, as a set of tepid economic data dampened investor sentiment about the growth of the economy.

U.S. retail sales growth was unexpectedly flat in July as people cut back on buying clothes and other goods, while producer price index fell 0.4 percent in July, the biggest drop in nearly a year.

Cooling consumer spending and tame inflation suggest the Federal Reserve will probably not raise interest rates anytime soon despite a robust labor market.

"While I wouldn't read too much into any one data point, the data underscores that the Fed doesn't need to be aggressive about raising interest rates," said David Lefkowitz, senior equity strategist at UBS Wealth Management Americas.

Traders are now pricing in a 41.6 percent chance of a December rate hike, compared with 45 percent on Thursday, according to CME Group's FedWatch tool.

At 12:28 p.m. ET (1628 GMT), the Dow Jones Industrial Average was down 47.19 points, or 0.25 percent, at 18,566.33.

The S&P 500 index was down 2.74 points, or 0.13 percent, at 2,183.05.

The Nasdaq Composite was down 4.90 points, or 0.09 percent, at 5,223.50.

At these levels, the three indexes are on track to be little changed for the week, while still being about 0.2 percent shy of all-time highs.

Oil prices rose nearly 2 percent as the dollar slipped following the release of the economic data.

Exxon Mobil rose 1.4 percent and gave the biggest boost to the Dow, while Chevron was up 0.5 percent.

Seven of the 10 major S&P 500 indexes were lower, with the materials sector falling the most by 1.06 percent. Financials followed with a 0.4 percent decline.

Dow Chemical fell 2.1 percent and was the top drag on the material index followed by DuPont's 1.6 percent drop, a day after European Union regulators opened a full investigation into their $130 billion merger deal.

Nordstrom rose 7.9 percent to $51.3 after the department store chain operator reported better-than-expected comparable sales and quarterly profit.

Declining issues outnumbered advancing ones on the NYSE by 1,576 to 1,310. On the Nasdaq, 1,489 issues fell and 1,215 advanced.

The S&P 500 index showed 19 new 52-week highs and no new lows, while the Nasdaq recorded 55 new highs and 24 new lows.

(Reporting by Yashaswini Swamynathan in Bengaluru; Editing by Anil D'Silva)