(Corrects implied expectations of rate hikes in paragraph 5 and removes link to Feb 19 story)
* Crude rally peters out but energy stocks cling to gains
* Fourth-quarter GDP expanded at 1 pct annual rate
* J.C. Penney shares jump after results
* Indexes: Dow -0.09 pct, S&P +0.04 pct, Nasdaq +0.29 pct
By Noel Randewich
Feb 26 (Reuters) - Wall Street was mixed on Friday as concerns about the timing of future interest rate hikes offset gains in materials and energy stocks.
In a break from a trend seen for much of this year, energy shares clung to gains even after a rally in crude oil prices faded, with ConocoPhillips up 3.72 percent.
The S&P materials index led the market with a 1.46 percent rise, rising for a third straight day. The utility sector fell 2.48 percent, with Duke Energy 2.80 percent lower.
The Commerce Department said gross domestic product expanded at a 1 percent annual rate in the fourth quarter, an upward revision from its previous estimate of 0.7 percent growth. The data exacerbated concerns that the U.S. Federal Reserve could raise rates sooner rather than later. The economy grew at a rate of 2.0 percent in the third quarter.
Federal funds futures implied traders see a 36-percent chance of the Fed raising rates in June and a 53-percent chance in December, both above Thursday's levels, according to CME Group's FedWatch program.
For the first time this year, the S&P 500 on Thursday exceeded its 50-day moving average, which some traders believe is a sign of improving sentiment.
But investors shell-shocked by months of volatility remained cautious, with decade-low oil prices, rate hikes and a potential slowdown China's economy still very much on their minds.
"I think we're near the top of the roller coaster again. All of the things that made the market go wild in January are still up in the air," said Brian Battle, director of trading at Performance Trust Capital Partners in Chicago.
In other U.S. data, consumer spending rose strongly in January, while underlying inflation picked up by the most in four years.
At 2:27 pm, the Dow Jones industrial average was down 0.09 percent at 16,681.75 points and the S&P 500 gained 0.04 percent to 1,952.39. The Nasdaq Composite added 0.29 percent to 4,595.70.
Shares of J.C. Penney jumped 14 percent after the department store operator reported better-than-expected revenue.
Baidu rose 10.65 percent after the Chinese internet search firm posted quarterly results that impressed Wall Street.
Advancing issues outnumbered decliners on the NYSE by 1,835 to 1,169. On the Nasdaq, 1,765 issues rose and 937 fell.
The S&P 500 index showed 21 new 52-week highs and no new lows, while the Nasdaq recorded 40 new highs and 41 new lows. (Additional reporting by Abhiram Nandakumar in Bengaluru; Editing by Leslie Adler)