* S&P healthcare sector gains help limit losses
* Virgin America surges on buyout deal with Alaska Air
* Smith & Wesson sink after rating downgrade
* Indexes down: Dow 0.21 pct, S&P 0.25 pct, Nasdaq 0.23 pct (Changes comment, updates prices)
By Abhiram Nandakumar
April 4 (Reuters) - Wall Street was mostly flat in quiet trading on Monday as investors took a break from a recent rally, which helped indexes recover from a steep selloff at the start of the year.
A 1.6 percent rise in Apple's shares was still not enough to drive indexes higher as investors awaited fresh catalysts following last week's encouraging data and Federal Reserve Chair Janet Yellen's cautious note on raising interest rates.
While the Fed's projections point to two rate hikes this year, traders expect only one, according to the CME Group's FedWatch program.
Crude hovered near one-month lows as hopes that top oil producers would reach an agreement to reduce a stubborn global glut faded.
"We've got a Goldilocks market right now - not too hot, not too cold," said Len Blum, managing partner of Blum Capital Advisors in New York.
"This is not like a uni-thematic market, where it's really being driven. It's a slow-growth market, in a historically good month, and coming off of good economic indicators," he said.
At 13:36 a.m. ET the Dow Jones industrial average was down 37.5 points, or 0.21 percent, at 17,755.25, the S&P 500 was down 5.23 points, or 0.25 percent, at 2,067.55 and the Nasdaq Composite was down 11.26 points, or 0.23 percent, at 4,903.28.
Eight of the 10 major S&P sectors were lower, led by a 0.71 percent decline in the industrials sector.
Apple was the biggest positive influence on all three major indexes.
Healthcare stocks' 1.28 percent rise helped limit losses. The sector was boosted by Edwards Lifesciences.
Shares of the medical device maker rose 18 percent to $106.02 after a study showed a less-invasive heart-valve implant was superior to open surgery, prompting a slew of brokerages to raise their ratings on the stock.
Virgin America surged 42 percent to $55.28, after the airline agreed to be bought by Alaska Air for about $2.60 billion. Alaska Air shares were down 4.8 percent at $78.10.
Smith & Wesson slumped 16.6 percent to $23.16 after Cowen cut its rating on the stock to "market perform".
Declining issues outnumbered advancing ones on the NYSE by 2,072 to 885. On the Nasdaq, 1,412 issues fell and 1,351 rose.
The S&P 500 index showed 55 new 52-week highs and no new lows, while the Nasdaq recorded 58 new highs and 18 new lows. (Reporting by Abhiram Nandakumar in Bengaluru; Editing by Anil D'Silva)