* Wal-Mart biggest drag on Dow, S&P
* Housing starts jump to 7.5-yr high
* Indexes: Dow up 0.05 pct, S&P down 0.01 pct, Nasdaq down 0.12 pct (Updates to early afternoon)
By Sweta Singh
May 19 (Reuters) - U.S. stocks were little changed on Tuesday, constrained by Wal-Mart’s weak results and as investors took a breather after a rally that took the Dow Jones industrial average and the S&P 500 to record closing highs the previous day.
Stronger-than-expected housing data also suggested that the Federal Reserve could have room to raise interest rates sooner rather than later.
U.S. housing starts jumped to their highest level in nearly 7-1/2 years in April and permits soared.
A stream of weak economic data through last week suggested that Fed would wait to see more strength in the economy before raising rates.
Global stock markets jumped and the dollar rose on signals the European Central Bank may accelerate its 1 trillion euro ($1.11 trillion) bond-buying program over the next two months.
“I definitely think the markets are overvalued at this time but it’s the only place where capital is going,” said Drew Horter, founder of Horter Investment Management in Cincinnati.
“You have to be very careful in this market and there could be some pullback.”
The S&P 500 is trading at 17.1 times forward earnings, compared with its 10-year median of 14.7, according to Thomson Reuters StarMine.
Seven of the 10 major S&P 500 sectors were down in early afternoon trading, with the energy index weighing the most with a 1.2 percent fall. Schlumberger was down 2.9 percent, making it the biggest drag on the index.
Oil prices fell on Tuesday as the dollar strengthened and on evidence of ample supplies of Middle Eastern oil despite wars in northern Iraq, Syria and Yemen.
At 12:34 a.m. ET (1634 GMT) the Dow Jones industrial average was up 8.98 points, or 0.05 percent, at 18,307.86, the S&P 500 was down 0.19 points, or 0.01 percent, at 2,129.01 and the Nasdaq Composite was down 6.13 points, or 0.12 percent, at 5,072.31.
Wal-Mart’s shares were down 3.98 percent at $76.74 and were the biggest drag on the Dow and the S&P 500 after the company reported lower-than-expected U.S. same-store sales growth.
Home Depot was down 0.9 percent at $113.27 after the company reported quarterly results.
TJX Cos was up 4 percent at $69.96 after it reported a 6 percent rise in quarterly sales.
Urban Outfitters was down 16.7 percent at $33.91 after it reported quarterly sales that fell short of market estimates.
Take-Two Interactive rose 15 percent to $21.89 after its profit handily beat market estimates, helped by strong digital sales of “Grand Theft Auto V” and “NBA 2K15” titles.
Declining issues outnumbered advancers on the NYSE by 1,850 to 1,103, for a 1.68-to-1 ratio on the downside. On the Nasdaq, 1,529 issues fell and 1,140 advanced for a 1.34-to-1 ratio favoring decliners.
The S&P 500 index posted 38 new 52-week highs and two new lows; the Nasdaq Composite recorded 97 new highs and 37 new lows. ($1 = 0.8980 euros) (Additional reporting by Tanya Agrawal in Bengaluru; Editing by Saumyadeb Chakrabarty)