August 17, 2018 / 5:32 PM / a year ago

US STOCKS-Nasdaq hit as chip stocks fall; defensive sectors prop up Dow, S&P

* Chip stocks drop on weak Nvidia, AMAT forecasts

* FANGs slip, but Apple jumps to notch new record high

* Defensive Telecom, REIT, consumer staples top gainers

* Tesla falls, Musk says go-private tweet not reviewed

* Indexes: Dow up 0.22 pct, S&P flat, Nasdaq down 0.29 pct (Changes comment, updates prices to early afternoon)

By Shreyashi Sanyal

Aug 17 (Reuters) - Weak forecasts from Nvidia and Applied Materials hit chipmakers and dragged the Nasdaq lower on Friday, while the S&P 500 and Dow Industrials were kept afloat by gains in the defensive sectors such as telecoms and consumer staples.

Chipmaker Nvidia plunged 4.5 percent, while chip equipment maker Applied Materials tumbled 6.7 percent after the current-quarter sales forecasts of the two companies missed Wall Street estimates.

The Philadelphia Semiconductor Index dropped 1.07 percent, falling for the fourth straight session on fears that a two-year chip boom may be losing steam.

The tech sector pulled back from a drop of as much as 0.7 percent but was down 0.28 percent, the most among the 11 major S&P sectors.

The broader market also pulled back, with seven of the 11 S&P sectors higher. The defensive utilities, consumer staples, real estate and telecom sectors were up between 0.49 percent and 0.70 percent.

“Today seems more defensive given the run up with had this week,” said William Norris, chief investment officer and head of asset management, CIBC Bank USA.

“Nothing unusual today, as long as the fundamentals remain strong in the U.S. then tech sector should be fine. This is not the beginning of a downturn in the tech sector.”

While the United States and China are set to resume trade talks next week, Turkey could face further U.S. sanctions after a report said a Turkish court rejected an appeal to release a detained American pastor.

“Investors are shifting focus from earnings and getting back to more of the geopolitical risks with headwinds such as trade issues and growing concerns between emerging markets like Turkey.”

At 13:10 a.m. EDT the Dow Jones Industrial Average was up 55.62 points, or 0.22 percent, at 25,614.35, the S&P 500 was up 1.22 points, or 0.04 percent, at 2,841.91 and the Nasdaq Composite was down 22.42 points, or 0.29 percent, at 7,784.10.

Defying the tech weakness was Apple, rising 2 percent to a record high. But the other FAANG stocks - Facebook , Amazon, Netflix and Google-parent Alphabet – fell between 1.5 percent and 2 percent.

Department store chain Nordstrom jumped 12.1 percent after its same-store sales growth beat estimates.

Tesla shares sank 8.4 percent after CEO Elon Musk told the New York Times in an hour-long interview that his tweet last week about taking the company private was not reviewed by anybody.

Second-quarter earnings are winding down and have been stronger than expected, with 79.2 percent of the 467 S&P 500 that have reported so far beating estimates, according to Thomson Reuters I/B/E/S.

President Donald Trump said he had asked the U.S. financial regulator to study the impact of allowing companies to file reports every six months instead of every quarter.

Advancing issues outnumbered decliners by a 1.79-to-1 ratio on the NYSE and a 1.11-to-1 ratio on the Nasdaq. The S&P index recorded 30 new 52-week highs and three new lows, while the Nasdaq recorded 54 new highs and 53 new lows. (Reporting by Shreyashi Sanyal in Bengaluru; Editing by Arun Koyyur)

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