Wall Street mixed as Apple weighs and investors eye rate hike

By Noel Randewich

(Reuters) - U.S. stocks were mixed on Tuesday afternoon, as gains in healthcare stocks were offset by a drop in Apple and investors hunkered down for a potential interest rate hike next month.

Apple's shares fell 3.23 percent to $116.67 after Credit Suisse said Apple had cut component orders by as much as 10 percent, indicating weakening demand for its new iPhones.

The stock was the biggest drag on the three major indexes. The S&P 500 flittered between marginal losses and gains in afternoon trade after falling in the four previous sessions.

The report added to fears of a slowdown in global growth, especially in China, a key market for many U.S. companies including Apple, ahead of the crucial holiday shopping season.

Companies will also be hit with higher borrowing costs if the U.S. Federal Reserve raises interest rates from near-zero levels next month, as is widely expected after Friday's strong jobs report.

"We're potentially going to see that rate hike in December and you're coming out of such a strong October, so that's probably going to keep the lid on the upside," said Kurt Brunner, a portfolio manager at Swarthmore Group in Philadelphia.

The prospect of a rate hike sent the dollar to a seven-month high. A strong dollar eats into the overseas sales at U.S. companies.

Data on Tuesday showed persisting deflationary pressure in China and followed disappointing trade data over the weekend.

At 2:08 pm, the Dow Jones industrial average was down 0.04 percent at 17,724.17 points and the S&P 500 was flat at 2,078.48. The Nasdaq Composite dropped 0.44 percent to 5,073.10.

Six of the 10 major S&P sectors were higher, with the health sector's <.SPXHC> 0.55 percent advance leading the gainers, helped by a 3.5 percent increase in Allergan . The materials index <.SPLRCM> fell 1.03 percent.

Apple suppliers Skyworks , Avago , Cirrus Logic and Qorvo were down between 3.7 percent and 10 percent.

Gap fell 3.17 percent after its comparable sales fell more than expected in October.

Among other gainers on Tuesday, D.R. Horton surged 8.24 percent after its quarterly profit jumped 44 percent. Other homebuilders also rose.

Advancing issues outnumbered declining ones on the NYSE by 1,551 to 1,480. On the Nasdaq, 1,517 issues fell and 1,228 advanced.

The S&P 500 index showed five new 52-week highs and five new lows, while the Nasdaq recorded 70 new highs and 85 new lows.

(Additional reporting by Abhiram Nandakumar in Bengaluru; Editing by Savio D'Souza and Nick Zieminski)