US STOCKS-Wall Street drops as Broadcom warning hits chip stocks

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* Broadcom slides after warning of chip demand slowdown
* Tech down most among 11 major S&P sectors; Chips tumble
* China's May industrial output growth slows to 17-yr low
* Data shows U.S. retail sales rise in May
* Indexes down: Dow 0.14%, S&P 0.25%, Nasdaq 0.54%

(Updates to early afternoon)
By Shreyashi Sanyal
June 14 (Reuters) - U.S. stocks dropped on Friday, as shares
of chipmakers sank on a warning from sector major Broadcom of a
broad weakening in global demand and Chinese data pointed to the
worst slowdown in industrial growth in 17 years.
Shares of Broadcom Inc AVGO.O fell 6.53% after it cut its
full-year revenue forecast by $2 billion, blaming the U.S.-China
trade conflict and export curbs on Huawei Technologies Co Ltd
HWT.UL . Shares of Apple Inc AAPL.O also slipped 0.85% and weighed
the most on the S&P 500 .SPX and the Nasdaq .IXIC . Broadcom
is a major supplier to the iPhone maker.
"This is driven by the lack of agreement with China.
Everyone knows that if and when this deal gets done, there is
going to be a positive reaction from semiconductors," said Kevin
Miller, chief investment officer at E-Valuator Funds in
Minneapolis, Minnesota.
Losses in chip companies, who both source product and sell
heavily in China, dragged the benchmark S&P 500 index .SPX
lower, with the Philadelphia Semiconductor index .SOX tumbling
2.80%.
"People are backing off of optimism that a trade deal will
get done and it'll probably drag out longer into the year," said
Ryan Nauman, market strategist at Informa Financial Intelligence
in Zephyr Cove, Nevada.
Earlier in the day, global stocks fell after China's
industrial output growth in May slowed below expectations and
showed signs of weakening demand. Technology stocks .SPLRCT fell 0.83%, the most among the
11 major S&P sectors. The trade-sensitive industrials .SPLRCI
slipped 0.54%, with 3M Co MMM.N weighing on the sector. Shares
3M also added to pressure on the Dow .DJI .
At 13:08 p.m. ET the Dow Jones Industrial Average was down
37.50 points, or 0.14%, at 26,069.27, the S&P 500 was down 7.34
points, or 0.25%, at 2,884.30 and the Nasdaq Composite was down
42.55 points, or 0.54%, at 7,794.58.
The S&P 500 index has so far gained 4.8% in June and was on
track to record a second straight week of gains on hopes the
Federal Reserve will soon cut interest rates.
A Fed meeting next week may provide the acid test of market
expectations that the U.S. central bank could cut rates as much
as three times this year, while a G20 summit at the end of the
month may yet yield more progress on a trade deal.
In a bright spot, data showed U.S. retail sales increased in
May and sales for the prior month were revised higher,
suggesting a pick-up in consumer spending that could ease fears
the economy was slowing down sharply in the second quarter. pet products retailer Chewy Inc CHWY.N rose 63% in
its market debut on Monday, at a valuation of over $14 billion
and joined a host of high-profile companies, such as Lyft Inc
LYFT.O and Uber Technologies Inc UBER.N that listed on U.S.
stock exchanges this year.
Declining issues outnumbered advancers for a 1.70-to-1 ratio
on the NYSE and a 1.94-to-1 ratio on the Nasdaq.
The S&P index recorded 27 new 52-week highs and two new
lows, while the Nasdaq recorded 37 new highs and 64 new lows.