* Two Fed officials' comments boost rate hike optimism
* Bank index rises the most in nearly two weeks
* Fed Chair Janet Yellen due to speak on Friday
* Dow down 0.1 pct, S&P up 0.02 pct, Nasdaq up 0.09 pct (Updates to early afternoon)
By Yashaswini Swamynathan
Aug 25 (Reuters) - Wall Street was little changed on Thursday afternoon as a drop in consumer stocks was offset by gains in technology companies as well as financials after two more Federal Reserve officials said interest rates can be raised.
Their comments followed the hawkish tone set by key Fed policymakers in recent days and came ahead of Fed Chair Janet Yellen's speech on Friday at Jackson Hole, which will be assessed to see if she takes an aggressive stance.
"I do think it is time to move that rate," Kansas City Fed President and voting member, Esther George, told CNBC, while Dallas Fed President Robert Kaplan said the central bank was "moving toward being able to take another step."
Following the comments, traders sharply increased their expectations of a hike in September to 24 percent from 18 percent, while pricing in a roughly 55 percent chance of a December hike, according to CME Group's FedWatch program.
The S&P 500 financials, which stands to gain the most from higher rates, was up 0.17 percent. The KBW Bank index rose 0.31 percent, the most in nearly two weeks.
"There is healthy skepticism about the Fed raising rates ahead of Yellen's comments tomorrow," said Adam Sarhan, chief executive officer at Sarhan Capital.
"Throughout this year they flirt with the idea of a rate hike, but when push comes to shove, they back off and kick the can down the road."
At 12:30 p.m. ET the Dow Jones industrial average was down 19.17 points, or 0.1 percent, at 18,462.31.
The S&P 500 was up 0.34 points, or 0.02 percent, at 2,175.78.
The Nasdaq Composite was up 4.59 points, or 0.09 percent, at 5,222.28.
Six of the 10 major S&P 500 indexes were higher, with the biggest boost coming from the heavily-weighted technology index's 0.26 percent gain.
The consumer discretionary index dropped the most, by 0.22 percent, weighed down by Dollar General and Dollar Tree after their disappointing quarterly sales.
The consumer staples index dropped 0.15 percent.
One bright spot in retail was Tiffany, which rose 7 percent to $73.71 after the jeweler's quarterly profit unexpectedly increased. The stock was the top percentage gainer on the S&P 500.
Advancing issues outnumbered decliners on the NYSE by 1,587 to 1,267. On the Nasdaq, 1,527 issues rose and 1,154 fell.
The S&P 500 index showed five new 52-week highs and no new lows, while the Nasdaq recorded 54 new highs and 17 new lows. (Reporting by Yashaswini Swamynathan in Bengaluru; Editing by Savio D'Souza)