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* Apple, tech stocks drop as U.S.-China trade tensions mount
* Top chipmakers to not supply Huawei - report
* Sprint, T-Mobile jump as merger wins FCC chair's backing
* Indexes down: Dow 0.32%, S&P 0.54%, Nasdaq 1.23% (Updates to early afternoon, adds comments)
By Shreyashi Sanyal and Sruthi Shankar
May 20 (Reuters) - U.S. stocks dropped on Monday, asWashington's restrictions on China'sHuawei Technologies stokedfears about a hit to the broader technology sector and ratchetedup trade tensions between the world's two largest economies.
Apple IncAAPL.O slumped 3.4%, weighing the most on thethree main indexes and driving down the S&P 500 technologysector .SPLRCT 1.51%, the biggest decliner among the six S&Psectors trading lower.
The iPhone maker was also pressured by a warning from HSBCthat higher prices for the company's products following thelatest increases in tariffs could have "dire consequences" ondemand.
U.S. suppliers of HuaweiHWT.UL , including QualcommQCOM.O , Micron TechnologyMU.O and Broadcom IncAVGO.O ,fell between 3.2% and 5.3%, while the Philadelphia SemiconductorIndex .SOX slid 3.19%, its lowest level in over two months.
"This whole thing is going to have an impact on earnings,consumers will probably shift buying habits and it will alsoturn up pressure on the U.S. and China to reach a deal sooner,"said Robert Pavlik, chief investment strategist and seniorportfolio manager at SlateStone Wealth LLC in New York.
Huawei, the world's largest telecoms equipment maker, wasadded to a trade blacklist by the Trump administration onThursday, piling on more worries for global markets reelingunder uncertainties sparked by the latest round of tariffs. urn:newsml:reuters.com:*:nL2N22W044
Mobile phone parts maker Lumentum Holdings IncLITE.O saidit would halt shipments to Huawei and cut its quarterly revenueexpectations, driving its shares down 3%. urn:newsml:reuters.com:*:nL4N22W2U9
"Inventory corrections are going on in the semiconductorspace and the industry is pricing in the Huawei impact on thevalue chain but they are not pricing in the global slowdown,"said Peter Cecchini, managing director and chief marketstrategist at Cantor Fitzgerald in New York.
Alphabet Inc'sGOOGL.OGoogle has suspended some businesswith Huawei, Reuters reported on Sunday, while chipmakersincluding Intel CorpINTC.O , Qualcomm, Xilinx IncXLNX.O andBroadcom will not supply the Chinese company until furthernotice, according to a Bloomberg report. urn:newsml:reuters.com:*:nFWN22V00J
Helping limit losses on the main indexes were gains inSprint Corp S.N and T-Mobile US IncTMUS.O .
Sprint shares jumped 22.5%, while T-Mobile rose 5.1% aftertheir proposed $26 billion merger won support of the U.S.telecoms regulator chairman. urn:newsml:reuters.com:*:nL2N22W0A3
Rivals Verizon Communications IncVZ.N and AT&T IncT.N gained about 2% each.
At 12:55 p.m. ET, the Dow Jones Industrial Average .DJI was down 81.38 points, or 0.32%, at 25,682.62. The S&P 500 .SPX was down 15.54 points, or 0.54%, at 2,843.99 and theNasdaq Composite .IXIC was down 95.85 points, or 1.23%, at7,720.43.
After touching record highs in May, Wall Street's mainindexes have succumbed to selling pressure on mounting concernsabout a prolonged U.S.-China trade war. The S&P 500 is on trackto post its worst monthly decline since the December sell-off,trading nearly 4% off its all-time high.
A clutch of retailers such as Home DepotHD.N , NordstromJWN.N , Kohl'sKSS.N and TargetTGT.N report this week andinvestors will watch out for comments on the impact of thelatest round of tariffs.
Dish Network CorpDISH.O shares tumbled 9.9%, the mostamong S&P 500 companies, after the company said it would buybroadcast satellite service assets from EchoStar Corp in an $800million deal. urn:newsml:reuters.com:*:nL4N22W37S
Declining issues outnumbered advancers for a 1.59-to-1 ratioon the NYSE and for a 1.52-to-1 ratio on the Nasdaq.
The S&P index recorded 24 new 52-week highs and 11 new lows,while the Nasdaq recorded 26 new highs and 126 new lows. (Reporting by Shreyashi Sanyal and Sruthi Shankar in Bengaluru;Editing by Sriraj Kalluvila) ((Shreyashi.Sanyal@thomsonreuters.com; +1 646 223 8780 ;Reuters Messaging:Shreyashi.Sanyal.email@example.com))