* Euro zone summit on Greece proposal to start at 1600 GMT
* U.S. May trade deficit widens less than expected
* AMD slumps after cutting quarterly revenue forecast
* Shake Shack falls after Morgan Stanley rating cut
* Indexes down: Dow 0.24 pct, S&P 0.22 pct, Nasdaq 0.45 pct (Updates to open)
By Tanya Agrawal
July 7 (Reuters) - U.S. stocks opened higher before quickly reversing course on Tuesday morning, setting the stage for another volatile session as investors await the outcome of a euro zone summit that will attempt to find a solution to the ongoing debt crisis in Greece.
The summit begins at 12 p.m. ET (1600 GMT) in Brussels and Greek Prime Minister Alexis Tsipras is under pressure to negotiate a deal as the country is running out of cash and the European Central Bank has tightened funding.
Greece’s next debt deadline is July 20 when it has to repay $3.9 billion of bonds to the ECB. Finnish finance minister Stubb said the currency bloc was not looking at bridge finance for Greece “at this stage”.
The uncertainty around Greece comes as the quarterly earnings season in the United States draws near. Alcoa kicks off the season with its report on Wednesday. Profit is expected to have fallen 3 percent in the April-June quarter, according to Thomson Reuters data.
“U.S. markets really are taking their cues from what’s happening outside the country as we head into the earnings season,” said Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago.
“Valuations are still high and earnings are going to be rough with companies adding not more than 1-3 percent year over year. We expect the market to continue moving sideways for the remainder of the year.”
At 9:46 a.m. ET the Dow Jones industrial average was down 43.29 points, or 0.24 percent, at 17,640.29, the S&P 500 was down 4.58 points, or 0.22 percent, at 2,064.18 and the Nasdaq Composite was down 22.30 points, or 0.45 percent, at 4,969.64.
Six of the 10 major S&P 500 sectors were lower. The materials index index led the declines with a 1.1 percent fall, weighed down by a strong dollar. The dollar index was up 0.81 percent at $97.05, its highest level in a month.
A stronger dollar will have impacted corporate results in the past quarter as it slows foreign demand for U.S. goods, impacting trade.
Data on Tuesday showed that the U.S. trade deficit widened less than expected in May, suggesting economists might raise slightly their forecasts for economic growth in the quarter.
Advanced Micro Devices shares slumped 16 percent to $2.07 after the chipmaker cut its quarterly revenue forecast, citing weaker-than-expected PC demand.
Pinnacle Entertainment rose 7.1 percent to $40.15 after Gaming and Leisure Properties raised its offer for its real estate assets to about $5 billion, including debt.
Shake Shack fell 6.2 percent to $55.34 after Morgan Stanley cut its rating on the hamburger chain operator’s stock to “underweight”, according to theflyonthewall.com.
Declining issues outnumbered advancers on the NYSE by 1,766 to 980. On the Nasdaq, 1,715 issues fell and 586 advanced.
The S&P 500 index showed five new 52-week highs and 29 new lows, while the Nasdaq recorded 22 new highs and 74 new lows. (Editing by Savio D‘Souza)