* China investment, factory output miss expectations
* U.S. Fed to meet Wednesday and Thursday
* Alibaba falls after Barron's report
* Apple up after iPhone pre-orders set to beat record
* Indexes down: Dow 0.42 pct, S&P 0.47 pct, Nasdaq 0.44 pct (Updates to early afternoon)
By Tanya Agrawal
Sept 14 (Reuters) - U.S. stocks were lower in early afternoon trading on Monday as investors awaited Federal Reserve's interest rate meeting this week even as fears of slowing growth in China continue to rattle global markets.
Stocks are expected to remain volatile in the run-up to the policy meeting on Wednesday and Thursday, when the Fed is expected to decide on its first interest rate increase since 2006.
"The uncertainty is so high in regard to the announcement ... it leaves investors a little bit paralyzed relative to what to do in anticipation thereof," said Mark Luschini, chief investment strategist at Janney Montgomery Scott in Philadelphia.
A Reuters poll showed that a small majority of forecasters still expect a Fed hike on Thursday, though markets-based models suggest policy tightening will be delayed.
Data on Monday showed that growth in China's investment and factory output in August missed forecasts, raising the chances that China's third-quarter economic growth may dip below 7 percent for the first time since the global crisis.
"China continues to be a concern as investors look for a bottom in regard to the country even though the government has a lot of room to stimulate growth," said Chris Bertelsen, chief investment officer of Global Financial Private Capital in Sarasota, Florida.
At 12:37 ET (1637 GMT) the Dow Jones industrial average was down 69.38 points, or 0.42 percent, at 16,363.71, the S&P 500 was down 9.17 points, or 0.47 percent, at 1,951.88 and the Nasdaq Composite was down 21.04 points, or 0.44 percent, at 4,801.30.
Nine of the 10 major S&P sectors were lower with the materials index's 1.18 percent fall leading the decliners.
The energy index also declined 0.95 percent as oil prices fell more than 1 percent on weak China data. Exxon and Schlumberger fell 1 percent.
Stocks have been volatile since China devalued its currency in August and the impact of a slowdown in the country on global growth rattled investors. The S&P 500 has had moves of at least 1 percent in more than 10 sessions since Aug. 20.
Wall Street closed higher last week with the S&P 500 and Nasdaq composite posting their biggest weekly gain since July.
The Fed has said it will raise rates when it sees a sustained economic recovery with special emphasis on the job market and inflation.
U.S. data released last week painted a mixed picture, further clouding the outlook for what the Fed will decide to do this week.
Apple shares were up 0.7 percent at $115.06 after the company said its iPhone pre-orders were on track to beat last year's first-weekend record.
Alibaba Group Holding fell 4.4 percent to $61.80 after Barron's said the company's shares could lose another 50 percent of their value. Yahoo, which has a stake in Alibaba, fell 3.9 percent to $30.19
Solera Holdings, jumped 8.7 percent to $53.76 after the company said it agreed to be acquired by an affiliate of private equity firm Vista Equity Partners for $3.74 billion.
Declining issues outnumbered advancing ones on the NYSE by 1,873 to 1,055. On the Nasdaq, 1,601 issues fell and 1,069 advanced.
The S&P 500 index showed two new 52-week highs and four new lows, while the Nasdaq recorded 36 new highs and 55 new lows. (Reporting by Tanya Agrawal; Editing by Don Sebastian)