* Commodity prices weigh on materials, energy shares
* Fed’s Dudley says conditions ripe for rate hike
* Kohl’s quarterly results leads rally in retailers
* PayPal hit by WSJ report on rival service by Apple
* Indexes down: Dow 1.14 pct, S&P 0.93 pct, Nasdaq 0.56 pct (Updates to early afternoon)
By Abhiram Nandakumar
Nov 12 (Reuters) - U.S. stocks hit session lows in early afternoon trading on Thursday, as a fall in commodity prices weighed on energy and materials stocks, and comments by several Federal Reserve policymakers pointed to an interest-rate hike next month.
The rout hit all 10 major S&P sectors and pushed the Dow and S&P 500 below their 200-day moving averages.
Investors are keeping a watchful eye on whether the Fed will raise interest rates off near-zero levels in December, as is widely expected after Friday’s strong jobs data.
Fed Chair Janet Yellen on Thursday did not comment on the economy or the timing of a rate hike.
But New York Fed President William Dudley said “it is quite possible that the conditions the Committee has established to begin to normalize monetary policy could soon be satisfied.”
“The possibility of a further delay (of a rate hike) is getting less and less,” said David Schiegoleit, senior portfolio manager at U.S. Bank Private Client Reserve in Los Angeles.
Higher rates increase borrowing costs for companies.
At 12:33 p.m. ET (1733 GMT), the Dow Jones industrial average was down 202.4 points, or 1.14 percent, at 17,499.82.
The S&P 500 was down 19.26 points, or 0.93 percent, at 2,055.74 and the Nasdaq Composite index was down 28.14 points, or 0.56 percent, at 5,038.88.
Crude prices hit 2-1/2 month lows, while copper and other metal prices tumbled to multi-year lows, hurt by a strong dollar, weak Chinese data and concerns of oversupply.
The energy sector sank 2.3 percent. Chevron and Exxon were down more than 2 percent, weighing the most on the S&P and the Dow.
The materials sector was off 1.45 percent, led by a 5.8 percent fall in miner Freeport-McMoRan.
Retailers were a bright spot after Kohl’s reported better-than-expected quarterly net sales, sending its shares up 5.7 percent at $45.61.
J.C. Penney was up about 3.9 percent. Nordstrom , which was up 1.7 percent, is scheduled to report results after the close.
Cisco, also set to report after the bell, was up 0.4 percent and was among the biggest influence on all three indexes.
Advanced Auto Parts dropped nearly 14 percent to $167.55 after it reported quarterly profit below estimates.
PayPal’s shares slid 2.8 percent to $35.30 after the Wall Street Journal reported Apple was in talks with U.S. banks to develop a rival payment service. Apple was flat.
Declining issues outnumbered advancing ones on the NYSE by 2,368 to 613. On the Nasdaq, 1,867 issues fell and 822 advanced.
The S&P 500 index showed two new 52-week highs and 16 new lows, while the Nasdaq recorded 25 new highs and 112 new lows. (Reporting by Abhiram Nandakumar in Bengaluru; Editing by Savio D‘Souza)