* AIG shares slip after posting decline in earnings
* Office Depot to close 400 U.S. stores; shares rally
* U.S. trade deficit narrows in March, exports rebound
* Indexes down: Dow 0.5 pct; S&P 0.4 pct; Nasdaq 0.4 pct
By Angela Moon
NEW YORK, May 6 (Reuters) - Wall Street edged lower on Tuesday, led by losses in financial stocks, while the technology sector was weighed by a selloff in shares of Twitter.
American International Group shares fell 2.3 percent to $51.54, a day after posting a 27 percent drop in quarterly income. The financial sector saw the biggest decline, with the S&P financial index down 0.8 percent.
Among early decliners in the technology sector was Twitter , which slumped nearly 10 percent to $35.01 after the expiration of a six-month “lock-up” period that had restricted the sale of about 82 percent of its outstanding equity.
Athenahealth Inc shares slumped 11 percent to $111.88, a day after hedge fund manager David Einhorn said his Greenlight Capital was betting against the company.
The Dow Jones industrial average fell 81.23 points, or 0.49 percent, to 16,449.32, the S&P 500 lost 7.17 points, or 0.38 percent, to 1,877.49 and the Nasdaq Composite dropped 14.967 points, or 0.36 percent, to 4,123.088.
With the day’s decline, the S&P 500 is about 20 points away from its all-time high set on April 4. For the year, the benchmark index is up 1.6 percent.
The Russell 2000 of small-cap companies was down 0.6 percent. Underperforming the broader market, the Russell 2000 closed down 0.2 percent on Monday, but for the quarter, the index is up 8.3 percent.
“Small-caps have underperformed other indexes over the past month, and (Monday) morning’s sell-off marked the sixth time that this major support level has been tested since the beginning of April,” said Bryan Sapp, senior trading analyst at Schaeffer’s Investment Research in Cincinnati, Ohio.
“Should this moving average give way to downside price action, it would be a major warning sign for stocks over the intermediate term,” he said.
Office Depot Inc raised its forecast for full-year adjusted operating income and said it would close at least 400 stores in the United States over two years, sending the office supply retailer’s shares up about 17 percent to $4.85.
Twitter’s share price rout came in heavy trading, with more than 43 million shares changing hands so far, compared to its 10-day average below 16 million. A sustained sell-off would place greater pressure on a stock already at all-time lows since April 29, when the company’s quarterly results showed sagging usage metrics.
Twitter has comfortably hit its revenue targets in the two quarters since it went public on Nov. 7. But rapidly mounting concerns about user growth and engagement levels has wiped out more than $18 billion of market value - half the company’s market capitalization - since its market debut.
Apple shares managed to stay above the $600 mark in early trading, up 0.5 percent at $604.22. The stock closed above $600 on Monday for the first time since late 2012.
On the data front, the U.S. trade deficit narrowed in March as exports rebounded, but the improvement was probably not enough to help first-quarter growth. (Editing by Bernadette Baum)