US STOCKS-S&P 500 drifts from record levels as retail sales slow

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* Applied Materials Inc rises on strong Q4 outlook
* Retail sales rise 1.2% in July vs 7.5% gain in June
* Tesla rises on Morgan Stanley upgrade
* Indexes down: Dow 0.10%, S&P 0.10%, Nasdaq 0.45%

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By Ambar Warrick and Medha Singh
Aug 14 (Reuters) - Wall Street was muted on Friday, with the
S&P 500 slipping from near record highs, as a slowdown in
domestic retail sales growth added to worries about a wobbly
post-pandemic economic recovery in the absence of a new U.S.
fiscal stimulus bill.
Technology .SPLRCT , which has been the best performing
sector through the pandemic, led declines among the 11 major S&P
indexes, while financials .SPSY and industrials .SPLRCI
outperformed.
Aggressive stimulus measures have helped Wall Street's three
main indexes bounce from a coronavirus-driven crash in March,
and the S&P 500 briefly traded above its Feb. 19 record close
for a second straight day on Thursday.
Although the benchmark index was set to rise for a third
straight week, it has struggled to top its all-time high of
3,393.52, as talks between top Democrats and the White House
over more stimulus measures to support the economy reached a
deadlock.
"A lot of the economic data points that we will see in the
next 2-3 months are definitely going to hinge on not having a
stalemate in talks," said David Wagner, portfolio manager and
analyst at Aptus Capital Advisors in Cincinnati, Ohio.
Data on Friday showed U.S. retail sales increased less than
expected last month and could slow further due to spiraling
COVID-19 cases and a reduction in unemployment benefit checks.
The figures also came on the heels of data suggesting a slowdown
in China's nascent rebound. "We still have a long way to go (in terms of an economic
recovery) and income support is the way to power the consumer
through. If we get strong retail sales data over the next two
months, given the lack of recent government action, it should be
very positive," Aptus Capital's Wagner added.
Uncertainty over the timing of a stimulus agreement has
undercut sentiment in recent sessions, with the upcoming U.S.
presidential elections expected to add another layer of caution.
At 11:00 a.m. ET, the Dow Jones Industrial Average .DJI
was down 26.73 points, or 0.10%, at 27,869.99, the S&P 500
.SPX was down 3.44 points, or 0.10%, at 3,369.99. The Nasdaq
Composite .IXIC was down 50.24 points, or 0.45%, at 10,992.26.
Applied Materials Inc AMAT.O gained 4.4% after it forecast
fourth-quarter revenue above analysts' estimates following a
rebound in demand for chip equipment and services. Electric car maker Tesla TSLA.O rose 1.6% after Morgan
Stanley upgraded the stock, citing potential in the firm's
battery business. Chinese search engine giant Baidu Inc BIDU.O posted
quarterly revenue a notch above estimates, but its shares slid
6.8% after its streaming service iQIYI IQ.O said it was being
probed by the U.S. Securities and Exchange Commission.

Shares of iQIYI dropped 14.1%.
Advancing issues outnumbered decliners by a 1.12-to-1 ratio
on the NYSE. Declining issues outnumbered advancers for a
1.26-to-1 ratio on the Nasdaq.
The S&P index recorded 12 new 52-week highs and no new low,
while the Nasdaq recorded 32 new highs and six new lows.