August 19, 2016 / 7:42 PM / in 2 years

US STOCKS-Wall St inches lower, as investors assess rate outlook

* Jackson Hole meeting next week

* Applied Materials jumps as forecast tops estimates

* Energy stocks drop as oil prices fall

* Indexes down: Dow 0.2 pct, S&P 0.1 pct, Nasdaq 0.01 pct (Updates to late afternoon)

By Caroline Valetkevitch

Aug 19 (Reuters) - U.S. stocks edged lower late Friday afternoon, led by declines in utility shares as investors weighed prospects for an interest rate increase in the coming months.

The S&P utility index, which tends to fall as propects for a rate increase rise, was down 1.3 percent.

San Francisco Fed President John Williams late on Thursday said if the U.S. central bank waited too long to raise rates, it could be costly for the economy and that a possible rate hike in September should be in play. The comments added to statements perceived as hawkish from New York Fed President William Dudley earlier in the week.

Investors also are bracing for next week’s meeting of global central bankers in Jackson Hole, Wyoming where Federal Reserve Chair Janet Yellen may provide more insight on the rate outlook.

“I think we’re due for a pause here as we look for greater clarity over the next couple of weeks,” said Terry Sandven, chief equity strategist at U.S. Bank Wealth Management in Minneapolis.

“Peformance year-to-date has been resilient, and we expect that type of behavior to continue as you move into the second half of the year.”

At 3:26 p.m. ET, the Dow Jones industrial average was down 33.58 points, or 0.18 percent, to 18,564.12, the S&P 500 had lost 2.35 points, or 0.11 percent, to 2,184.67 and the Nasdaq Composite had dropped 0.65 points, or 0.01 percent, to 5,239.49.

Applied Materials rose 6.8 percent after the chip equipment maker gave a strong current-quarter profit forecast.

The benchmark S&P 500 index is up about 7 percent this year. Its recent run to record highs has been partly supported by expectations that the Fed will continue to keep rates low, as well as some upbeat earnings and economic news.

Declining issues outnumbered advancing ones on the NYSE by a 1.51-to-1 ratio; on Nasdaq, a 1.05-to-1 ratio favored decliners.

The S&P 500 posted 19 new 52-week highs and no new lows; the Nasdaq Composite recorded 95 new highs and 22 new lows. (Additional reporting by Tanya Agrawal; Editing by Savio D’Souza and Chizu Nomiyama)

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