* All eyes on Fed; Jackson Hole meeting next week
* Applied Materials jumps as forecast tops estimates
* Energy stocks drop as oil prices reverse gains
* Dow down 0.17 pct, S&P down 0.23 pct, Nasdaq up 0.07 pct (Adds details, changes comment, updates prices)
By Tanya Agrawal
Aug 19 (Reuters) - The Dow Jones and S&P 500 were lower on Friday morning, pulled down by energy stocks as oil prices dropped and by financial shares as investors again focus on the timing of the next rate hike.
The Nasdaq was flat as Applied Materials led technology stocks higher. The stock rose 7 percent after the chip equipment maker's current-quarter profit forecast beat analysts' expectations.
Energy stocks fell 0.84 percent as Brent crude oil dropped after hitting an eight-week high, with weak fundamentals countering a lift in sentiment over a possible output freeze.
Investors were also cagey ahead of next week's meeting of central bankers from around the world in Jackson Hole, Wyoming, where Federal Reserve Chair Janet Yellen is likely to cement expectations for a slow pace of rate increases.
The benchmark S&P 500 index is up 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.
"The market is taking a bit of breather right now and consolidating after the gains we've recently seen," said Dave Donabedian, chief investment officer of Atlantic Trust in Boston.
"There is a fair amount of attention on Yellen's speech next week and there isn't too much for the market to trade on right now in this low-volume environment."
Traders are pricing in a 43.1 percent chance of a rate hike this December, according to CME Group's FedWatch Tool.
At 11:18 a.m. ET (1518 GMT) the Dow Jones Industrial Average was down 32.46 points, or 0.17 percent, at 18,565.24.
The S&P 500 was down 5.03 points, or 0.23 percent, at 2,181.99.
The Nasdaq Composite was up 3.72 points, or 0.07 percent, at 5,243.87.
Eight of the 10 major S&P sectors were lower, led by the defensive sectors. The telecoms index was down 1.16 percent and the utility index was down 1.29 percent.
The technology sector eked out a 0.17 percent gain.
Estee Lauder was down 3.9 percent at $91.40 as the cosmetics maker's quarterly sales rose less than expected.
Deere was up 5.5 percent at $81.17 after the farming machinery maker raised its full-year profit outlook.
Declining issues outnumbered advancing ones on the NYSE by 1,811 to 972. On the Nasdaq, 1,422 issues fell and 1,197 advanced.
The S&P 500 index showed 14 new 52-week highs and no new lows, while the Nasdaq recorded 64 new highs and 15 new lows. (Reporting by Tanya Agrawal; Editing by Savio D'Souza)