Wall Street slips as rate hike looms, Apple weighs

By Abhiram Nandakumar

(Reuters) - U.S. stocks were lower early on Tuesday afternoon, dragged down by Apple, as investors braced for an interest rate hike by the Federal Reserve next month and fretted about weakening demand in China.

Apple's shares fell 2.8 percent to $117.22 after Credit Suisse said the company had cut component orders by as much as 10 percent, indicating weakening demand for its new iPhones.

The stock was the biggest drag on the three major indexes. The S&P 500 was poised for a fifth straight day of losses, it's worst five-day run since the end of September.

The report on Apple added to fears of a slowdown in global growth, especially in China, a key market for many U.S. companies including Apple, ahead of the crucial holiday shopping season.

Companies will also be hit with higher borrowing costs if the Fed raises interest rates off near-zero levels next month, as is widely expected after Friday's strong jobs report.

The prospect of a rate hike sent the dollar to a seven-month high. A strong dollar eats into the overseas sales at U.S. companies.

"What we're seeing is the market actively pricing in the December rate hike, jumping ahead of the hike, discounting it ahead of time," said Mohanned Aama, managing director at Beam Capital Management in New York.

Data on Tuesday showed persisting deflationary pressure in China and followed disappointing trade data over the weekend.

At 12:41 p.m. ET (1741 GMT), the Dow Jones industrial average was down 29.93 points, or 0.17 percent, at 17,700.55.

The S&P 500 was down 3.49 points, or 0.17 percent, at 2,075.09 and the Nasdaq composite index was down 27.73 points, or 0.54 percent, at 5,067.57.

Six of the 10 major S&P sectors were lower, with the materials sector's <.SPLRCM> 1.22 percent fall leading the decliners.

"This market is susceptible to profit taking and a consolidation period after this quite impressive rally off of the lows in late September," said Andre Bakhos, managing director at Janlyn Capital in Bernardsville, New Jersey.

Apple suppliers Skyworks , Avago , Cirrus Logic and Qorvo were down between 3.7 percent and 7.0 percent.

Anadarko Petroleum was down 5.6 percent at $64.08 after Bloomberg reported that it had approached Apache with a takeover proposal. Apache was down 3.1 percent at $52.26.

Gap fell 3.7 percent to $26.66 after its comparable sales fell more than expected in October.

Among the few gainers on Tuesday, D.R. Horton was up 6.8 percent at $30.72 after its quarterly profit jumped 44 percent. Other homebuilders also rose.

Declining issues outnumbered advancing ones on the NYSE by 1,566 to 1,428. On the Nasdaq, 1,564 issues fell and 1,107 advanced.

The S&P 500 index showed four new 52-week highs and four new lows, while the Nasdaq recorded 55 new highs and 76 new lows.

(Reporting by Abhiram Nandakumar in Bengaluru; Editing by Savio D'Souza)