* Fed Chair Janet Yellen due to speak on Friday
* Kansas Fed President calls for gradual rates hikes
* Jobless claims drop; New orders for durable goods up
* Indexes down: Dow 0.12 pct, S&P 0.15 pct, Nasdaq 0.16 pct (Updates to open)
By Yashaswini Swamynathan
Aug 25 (Reuters) - Wall Street was lower on Thursday morning as investors nervously awaited Federal Reserve Chair Janet Yellen's take on interest rate hikes.
While the Fed is widely expected to maintain rates at its September meeting, Yellen's language on Friday morning will be assessed to see whether she takes a more aggressive stance.
Investors have been playing a waiting game all week, expecting Yellen to either endorse or dismiss the hawkish tone set by key policymakers, the latest from Kansas City Fed President and voting member, Esther George, on Thursday.
"I do think it is time to move that rate," George told CNBC, arguing on the basis of progress in employment and inflation. She also said rates should be increased gradually.
Traders expect an 18 percent chance of a rate hike in September and a chance of about 55 percent in December, according to CME Group's FedWatch program.
"I think the Fed is going to come out with a lot of words, but nothing is going to be changed," said James Abate, chief investment officer at Centre Funds.
Another set of robust data on Thursday also indicated the economy was resilient enough to absorb a rate hike.
Jobless claims unexpectedly fell last week, suggesting the labor market continued to gain momentum. New orders for manufactured capital goods rose for a second straight month in July, offering some signs of a recovery in business spending.
At 9:38 a.m. ET the Dow Jones Industrial Average was down 22.66 points, or 0.12 percent, at 18,458.82.
The S&P 500 was down 3.23 points, or 0.15 percent, at 2,172.21.
The Nasdaq Composite was down 8.23 points, or 0.16 percent, at 5,209.46.
Eight of the 10 major S&P 500 indexes were lower, led by the consumer discretionary sector's 0.27 percent drop.
The sector was weighed down by declines in Dollar General and Dollar Tree after both dollar store operators reported lower-than-expected sales.
Financials, which stand to gain the most in a higher-rate environment, rose 0.11 percent.
Mylan rose 3.7 percent to $44.74 after the drugmaker said it would offer discounts to reduce patient cost for its severe allergy treatment drug EpiPen.
Tiffany rose 6.1 percent to $73.02 after the jeweler reported an unexpected rise in quarterly profit.
Declining issues outnumbered advancing ones on the NYSE by 1,532 to 1,007. On the Nasdaq, 1,191 issues fell and 923 advanced.
The S&P 500 index showed no new 52-week highs and no new lows, while the Nasdaq recorded 11 new highs and five new lows. (Reporting by Yashaswini Swamynathan in Bengaluru; Editing by Savio D'Souza)