* Alcoa erases early gains after earnings; materials drag
* Oil falls near 6-year low
* Indexes down: Dow 0.5 pct, S&P 0.6 pct, Nasdaq 0.4 pct (Updates to afternoon)
By Caroline Valetkevitch
NEW YORK, Jan 13 (Reuters) - U.S. stocks fell in afternoon trading on Tuesday, reversing earlier gains, led by a drop in materials and energy shares.
The S&P 500 around midday broke below its 50-day moving average, triggering further selling. The major indexes had all been up more than 1 percent earlier.
Shares of homebuilders fell broadly after KB Home forecast a drop in gross margins for the first quarter. Homebuilder stocks had been up earlier in the session, but KB Home was last down 13.7 percent, while a housing index was down 0.9 percent.
Among materials shares, Alcoa Inc shares were down 2 percent, also having reversed earlier gains. The company late Monday reported a higher-than-expected quarterly profit due to automotive demand, higher aluminum prices and lower energy costs. The S&P materials index was down 1.6 percent.
At 1:54 p.m., the Dow Jones industrial average fell 78.6 points, or 0.45 percent, to 17,562.24, the S&P 500 lost 12.29 points, or 0.61 percent, to 2,015.97 and the Nasdaq Composite dropped 18.58 points, or 0.4 percent, to 4,646.13.
Declining issues outnumbered advancing ones on the NYSE by 1,960 to 1,086, for a 1.80-to-1 ratio; on the Nasdaq, 1,635 issues fell and 1,037 advanced for a 1.58-to-1 ratio favoring decliners.
The S&P energy index was down 1.2 percent. Brent and U.S. crude touched their lowest levels in almost six years as a big OPEC producer stood by the group’s decision not to cut output.
Goodyear Tire & Rubber stumbled 6.8 percent and was the S&P 500’s biggest percentage decliner after the estimated full-year operating income growth “slightly below” its forecast of 10 to 15 percent. (Additional reporting by Chuck Mikolajczak; Editing by Lisa Von Ahn and Nick Zieminski)