US STOCKS-Wall St overcomes early losses on grim retail sales data

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* Retail sales in Dec post biggest annual drop in 9 yrs

* Interest-rate sensitive financials fall

* Trade talks progress in Beijing

* Dow off 0.06 pct, S&P 500 up 0.02 pct, Nasdaq up 0.32 pct (Updates to late afternoon, changes byline)

By Stephen Culp

NEW YORK, Feb 14 (Reuters) - Wall Street struggled toreverse early losses on Thursday as an unexpected drop in retailsales dampened investor hopes for progress at the ongoingU.S.-China trade talks in Beijing.

The S&P 500 eked out a small gain and held above its 200-daymoving average, a key technical level. The Nasdaq turnedpositive, while the Dow remained slightly lower, weighed down byconsumer staples and tariff-sensitive industrials.

All three major U.S. stock indexes were held back byrate-sensitive financial stocks as U.S. Treasury yields fell onweaker-than-expected economic data.*:nL1N2090OF

Talks to defuse the ongoing tariff dispute between theworld's two largest economies moved to a higher level asU.S.-China negotiations progressed in Beijing ahead of the March1 deadline.*:nL3N20919A

But optimism about the trade talks was undercut by a reportfrom the U.S. Commerce Department showing retail sales inDecember suffered their biggest drop in more than nine years.*:nL1N2081MC

Separate reports from the Labor Department, showing asurprise increase in unemployment claims and an unforeseen dipin producer prices, pointed to a slowdown in U.S. economicactivity.

"There's no getting around it, (December) was a weak monthfor retail," said Tim Ghriskey, chief investment strategist atInverness Counsel in New York. "Concern about the economy is nowreflected in Q1 estimates, which are now negative."

Indeed, with the fourth-quarter reporting season now morethat three-fourths complete, analysts now see earnings growth of16.2 percent for the quarter, according to Refinitiv data.

But first-quarter estimates are less favorable. They show a0.3 percent year-on-year decline, which would mark the firstquarter of negative growth since the earnings recession thatended in 2016.

The Dow Jones Industrial Average .DJI fell 11.22 points,or 0.04 percent, to 25,532.05, the S&P 500 .SPX gained 1.07points, or 0.04 percent, to 2,754.1 and the Nasdaq Composite .IXIC added 24.67 points, or 0.33 percent, to 7,445.05.

Of the 11 major sectors in the S&P 500, 5 were in negativeterritory, with consumer staples .SPLRCS and financialsshowing the biggest percentage declines.

Cisco Systems IncCSCO.O rose 2.7 percent on the heels ofa better-than-expected earnings report as the network gear makerbenefited from strength in newer businesses and shrugged off theimpact of the U.S.-China trade war.*:nL3N2085II

Shares of American International Group IncAIG.N slid 7.6percent, on course for its worst day in 4 years after the globalinsurer posted a quarterly loss.*:nL3N209547

Coca-Cola CoKO.N shares fizzled, dropping 7.6 percent andproviding the biggest drag on the Dow after its full-year profitforecast fell well below Wall Street expectations.*:nL3N2094AC

Amazon.comAMZN.O dipped 0.7 percent after pulling theplug on its planned headquarters in New York due to localopposition.*:nL1N20916X

Canada Goose's GOOS.TO quarterly results and profitforecasts beat analyst expectations.*:nL3N209457 Still, theluxury coat maker's U.S.-listed shares sank 12.1 percent.

Avon Products IncAVP.N plunged 11.4 percent after themulti-level marketing cosmetics brand missed quarterly revenueestimates.*:nL3N20949I

Advancing issues outnumbered declining ones on the NYSE by a1.49-to-1 ratio; on Nasdaq, a 1.49-to-1 ratio favored advancers.

The S&P 500 posted 17 new 52-week highs and 1 new lows; theNasdaq Composite recorded 61 new highs and 22 new lows. (Reporting by Stephen Culp; Editing by Dan Grebler) ((; 646-223-6076;))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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