US STOCKS-S&P 500, Nasdaq fall after gloomy data; Fed officials dampen rate cut hopes

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* Fed's Harker does not see case for additional stimulus
* U.S. factory sector contracts in August
* Nordstrom jumps after profit beat
* Dow up 0.17%, S&P down 0.16%, Nasdaq falls 0.49%

(Updates to early afternoon)
By Akanksha Rana
Aug 22 (Reuters) - The benchmark S&P 500 and the Nasdaq fell
on Thursday after weak U.S. manufacturing data raised concerns
about the health of the economy, with comments from Fed
officials dampening hopes of future interest rate cuts.
A private survey showed U.S. manufacturing activity in
August contracted for the first time in almost a decade, signs
that factories are suffering from a global slowdown amid an
escalating U.S.-China trade war.
Yields on the U.S. two-year Treasury notes again moved above
those of 10-Year bonds in response to the disappointing data.
US/
"It's a very quiet market and you have to bear with it for
the short term," said Robert Pavlik, chief investment strategist
and senior portfolio manager at SlateStone Wealth LLC in New
York.
"I don't see a near term recession but looking at a year
from now, it could be possible ... If the (yield curve)
inversion continues into September and into October then it's
something to be more mindful about."
Adding to weak sentiment, President of Philadelphia Fed
Patrick Harker said he does not see the case for additional
stimulus. Kansas City Federal Reserve Bank President Esther
George, a policymaker with a vote on the Fed's policy-setting
panel this year, also said she does not yet see a signal of a
downturn in the U.S. economy. Their comments come ahead of a highly anticipated speech by
Fed Chairman Jerome Powell on Friday at an annual gathering of
central bankers in Jackson Hole, Wyoming.
Despite the stock market stabilizing from a selloff earlier
this month, investors are wary about how far policymakers are
willing to cut rates and Powell's remarks may prove crucial to
short-term sentiment.
At 12:29 p.m. ET, the S&P 500 .SPX was down 4.62 points,
or 0.16%, at 2,919.81 and the Nasdaq Composite .IXIC was down
39.35 points, or 0.49%, at 7,980.86.
The Dow Jones Industrial Average .DJI was up 44.95 points,
or 0.17%, at 26,247.68, lifted by shares of Boeing Co BA.N .
Boeing rose 4.1% as Reuters reported that the planemaker is
looking to increase production of its grounded 737 MAX jets as
early as October, suggesting the aircraft's return to service
was on track in early fourth quarter. Six of the 11 major S&P sectors were lower with a 0.55%
decline in technology .SPLRCT weighing the most on the
benchmark index.
Bank stocks .SPXBK , which tend to perform better in higher
interest rate environment, rose 1%.
Stocks initially opened higher as Nordstrom Inc JWN.N rose
16.2%, joining Target Corp TGT.N and Lowe's Cos Inc LOW.N
this week in delivering a quarterly profit beat and bolstering
confidence in consumer demand. Declining issues outnumbered advancers for a 1.12-to-1 ratio
on the NYSE and for a 1.39-to-1 ratio on the Nasdaq.
The S&P index recorded 32 new 52-week highs and four new
lows, while the Nasdaq recorded 51 new highs and 46 new lows.