S&P 500 edges lower on chip, retail weakness

By Sruthi Shankar

(Reuters) - The S&P 500 edged lower on Friday as gains in energy stocks were offset by declines in chip and retail companies, after weak results from Nvidia and Nordstrom.

Energy stocks rose 0.6 percent as oil prices recovered from sharp losses this week on expectations that OPEC and its allies would agree to cut output next month.

Markets opened lower following weak forecasts from Nvidia Corp and chip equipment supplier Applied Materials Inc, which fell 17.6 percent and 1.9 percent respectively.

The Philadelphia Semiconductor index was down 1.9 percent, while technology stocks fell 0.5 percent.

"Technology has been a sector that has been the most overvalued this year. Despite the fact that these are strong U.S. companies and will continue to generate earnings growth, what is priced into the market is almost perfection," said Andrew Lill, Americas chief investment officer of Morningstar Investment Management in Chicago.

Taking some pressure off the markets were comments from new Federal Reserve vice chair Richard Clarida about U.S. interest rates nearing the central bank's estimates of a neutral rate.

Analysts said Clarida's comments suggested that the Fed may be nearing the end of its tightening cycle. The bank typically stops raising rates once they hit the neutral level.

Worries about rising interest rates, peaking corporate earnings and signs of a slowdown in global growth have prompted investors to sell off risky assets. After the S&P 500's weakest performance in seven years in October, stocks are still struggling to find footing.

At 11:49 a.m. ET the Dow Jones Industrial Average was up 1.13 points, at 25,290.40, the S&P 500 was down 5.83 points, or 0.21 percent, at 2,724.37 and the Nasdaq Composite was down 57.46 points, or 0.79 percent, at 7,201.57.

In a gloomy week for retailers, department store operator Nordstrom Inc fell 13.8 percent after quarterly same-store sales missed estimates and the company reported charges from a credit card problem.

Nordstrom was the biggest decliner on the S&P discretionary index, which fell 1.2 percent.

Differing reports on the outcome of talks which are expected between U.S. President Donald Trump and Chinese President Xi Jinping at the sidelines of a G20 summit in Argentina later this month, has kept investors on edge.

Brexit-related uncertainty also prompted caution as British Prime Minister Theresa May battled to defend her much-criticized draft divorce deal with the European Union as calls grew for a vote of no confidence in her leadership.

Five of the 11 major S&P sectors were higher, with utilities rising 0.9 percent as PG&E Corp jumped 34.5 percent, following steep losses in the past six days, after Bloomberg reported that a regulatory official said it did not want the utility to go into bankruptcy should it be found responsible for the deadly wildfires in northern California.

Declining issues outnumbered advancers for a 1.44-to-1 ratio on the NYSE and a 1.83-to-1 ratio on the Nasdaq.

The S&P index recorded 19 new 52-week highs and eight new lows, while the Nasdaq recorded 18 new highs and 81 new lows.

(Reporting by Sruthi Shankar in Bengaluru; Editing by Shounak Dasgupta)