US STOCKS-Wall St flat as telecom gains offset by earnings
* Windstream rallies; set to spin off assets into REIT
* Merck rises as results beat expectations, but Pfizer slips
* Herbalife shares tumble after it cuts sales outlook
* Indexes: Dow flat, S&P off 0.1 pct, Nasdaq up 0.2 pct (Updates prices, changes comment, adds Corning)
By Rodrigo Campos
NEW YORK, July 29 (Reuters) - U.S. stocks were little changed on Tuesday after a rally in the telecommunications sector lost steam and a lower earnings forecast from UPS weighed on sentiment.
Windstream Holdings jumped 12.8 percent to $11.88 in its busiest trading day on record after the company filed to spin off assets into a tax-efficient publicly-traded real estate investment trust.
The strategy triggered bets on long-term advantages for peers but the initial gains reversed in late morning trade. The S&P telecoms sector index rose 2.8 percent after earlier gaining as much as 5.5 percent.
"Winstream was unbelievably good at keeping this close to the vest and everybody was surprised," said Kim Forrest, senior equity research analyst at Fort Pitt Capital Group in Pittsburgh. However, she said, "the rethinking of the larger telecoms becoming REITs took the wind off of the market." Continuación...