US STOCKS-Wall Street falls as energy drags; focus shifts to Fed meeting

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* Energy shares drop as oil prices slide
* Home Depot drops after Guggenheim downgrade
* Corning cuts forecast for display volumes; shares fall
* Indexes down: Dow 0.21%, S&P 0.03%, Nasdaq 0.04%

(Updates to open)
By Medha Singh
Sept 17 (Reuters) - U.S. stocks edged lower on Tuesday as a
drop in oil prices weighed on the energy sector, while investors
stayed away from making big bets ahead of the Federal Reserve's
two-day policy meeting, where it is widely expected to cut
interest rates.
The energy index .SPNY fell 1.59% and was the biggest drag
on the benchmark S&P 500 index .SPX after sources told Reuters
that Saudi Arabia was close to restoring 70% of the oil
production lost after weekend attacks on its biggest refinery.
The sector recorded its best one-day surge since January on
Monday.
The U.S. central bank concludes its policy meeting on
Wednesday, with traders currently expecting a 65.8% chance of a
quarter percentage point cut from the Fed this week, down from
88.8% on Friday, according to CME's FedWatch.
Rate-sensitive bank index .SPXBK was down 1% in
anticipation of a reduction in borrowing costs.
"It's just typical trading on the vigil of a Fed meeting,"
said Peter Cardillo, chief market economist at Spartan Capital
Securities in New York.
"We haven't seen any panic from what happened over the
weekend. I think (the Fed) will stick with a quarter of a
percentage point cut even after the Saudi attack."
Since the last interest rate cut in July, U.S. economic data
has shown mixed signals about the domestic economy. While strong
retail sales and wage growth have bolstered consumer confidence,
a protracted U.S.-China trade war has weighed on manufacturing
and business sentiment.
Latest data showed U.S. manufacturing output increased more
than expected in August, rebounding from a drop in July.
At 10:04 a.m. ET, the Dow Jones Industrial Average .DJI
was down 58.03 points, or 0.21%, at 27,018.79, the S&P 500
.SPX was down 1.03 points, or 0.03%, at 2,996.93. The Nasdaq
Composite .IXIC was down 3.29 points, or 0.04%, at 8,150.26.
Among stocks, Home Depot Inc HD.N dropped 1.6% after
Guggenheim downgraded the home improvement chain's shares to
"neutral" from "buy".
Corning Inc GLW.N tumbled 7.8% after the Gorilla glass
maker cut its current-quarter display volume forecast.
Kraft Heinz Co KHC.O slipped 3.7% after the packaged food
maker's second-largest investor, 3G Capital, sold over 25
million shares in open market at a discount.
Deputy-level trade talks between the United States and China
are set to resume on Thursday, but any agreement between the two
sides is expected to be a superficial fix at this stage.
Tariff concessions from both countries last week helped the
benchmark S&P 500 come within 1% of its all-time high touched in
July.
Declining issues outnumbered advancers for a 1.59-to-1 ratio
on the NYSE and a 1.77-to-1 ratio on the Nasdaq.
The S&P index recorded six new 52-week highs and one new
low, while the Nasdaq recorded 24 new highs and 10 new lows.