* All eyes on Fed; Jackson Hole meeting next week
* Applied Materials jumps as forecast tops estimates
* Energy stocks drop as oil prices reverse gains
* Indexes down: Dow 0.20 pct, S&P 0.25 pct, Nasdaq 0.08 pct (Updates to early afternoon)
By Tanya Agrawal
Aug 19 (Reuters) - The Dow Jones and S&P 500 were lower on Friday afternoon, pulled down by energy stocks as oil prices dropped, while the Nasdaq was little changed as Applied Materials boost technology stocks.
Applied Materials rose 7.3 percent after the chip equipment maker gave a strong current-quarter profit forecast. That helped the technology index inch up 0.21 percent, making it one of only two of the 10 major S&P sectors that were higher.
Energy stocks fell 0.86 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, mulling about when the Federal Reserve will raise interest rates next, were also cagey ahead of next week's meeting of global central bankers in Jackson Hole, Wyoming where Fed Chair Janet Yellen is likely to cement expectations for a slow pace of rate increases.
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.
"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 12:43 p.m. ET (1643 GMT) the Dow Jones Industrial Average was down 37.84 points, or 0.2 percent, at 18,559.86.
The S&P 500 was down 5.57 points, or 0.25 percent, at 2,181.45.
The Nasdaq Composite was down 4.16 points, or 0.08 percent, at 5,235.99.
The decliners among the 10 major S&P sectors were led by the defensive sectors. The telecoms index was down 1.12 percent and the utility index was down 1.43 percent.
Estee Lauder was down 2.7 percent at $92.49 as the cosmetics maker's quarterly sales rose less than expected.
Deere was up 11.4 percent at $85.70 after the farming machinery maker raised its full-year profit outlook.
Declining issues outnumbered advancing ones on the NYSE by 1,853 to 1,000. On the Nasdaq, 1,530 issues fell and 1,185 advanced.
The S&P 500 index showed 16 new 52-week highs and no new lows, while the Nasdaq recorded 81 new highs and 18 new lows. (Reporting by Tanya Agrawal; Editing by Savio D'Souza)