(Updates to mid-afternoon trading)

* Indexes down: Dow 0.35%, S&P 500 0.52%, Nasdaq 1.19%

* Memory-chip makers lead losses

* UnitedHealth ( UNH ) rises after 2026 profit forecast raise

* GE Aerospace falls despite lifting 2026 forecast

* US retail sales rise marginally in June

By Stephen Culp and Ragini Mathur

NEW YORK, July 16 (Reuters) - Chip stocks pulled the Nasdaq

and the S&P 500 lower on Thursday as they continue to lead

broader market moves despite generally upbeat U.S. economic data

and what has so far been a strong earnings season.

Among the 11 major sectors in the S&P 500, technology

was the biggest percentage loser, with a 4.8% drop in

semiconductor stocks weighing heavily on the sector and

the market.

Daily moves in chips have increasingly dictated the overall

movement of the major U.S. stock indexes, particularly the

tech-heavy Nasdaq.

"It comes strictly down to the weight of the chips in the S&P

500," said Paul Nolte, senior wealth advisor & market strategist

at Murphy & Sylvest in Elmhurst, Illinois. "Three or four years

ago, it was 8%, and now it's over 20%. If you look at the rest

of the market, it's doing fine."

The weakness in chips, even after chip demand bellwether TSMC

posted a 77% jump in quarterly profit, demonstrated the lofty

expectations for a sector that has soared by nearly 70% so far

this year. U.S.-listed shares of the chipmaker fell

3.5%.

Memory-chip makers were among the biggest laggards, with

SanDisk ( SNDK ), Western Digital ( WDC ), Seagate Technology ( STX )

, and Intel ( INTC ) down between 6.9% and 12.1%.

"Part of the reason for chip selloff is investors are realizing,

okay, let's start doing math here," Nolte added. "It's a

cyclical industry, and at some point, they're going to satisfy

chip demand. Then what happens?"

The Dow's losses were cushioned in part by a 2.5% gain in

UnitedHealth Group ( UNH ) after the company beat Wall Street

earnings estimates and hiked its 2026 forecast.

Healthcare stocks were up 2.2%.

United Airlines fell 1.4% as surging oil prices weighed

on its forward guidance.

GE Aerospace slid 6.3%, even after the company lifted its

2026 profit forecast.

Analysts have set a high bar for second-quarter earnings

season. S&P 500 companies, in aggregate, are expected to post

year-on-year earnings growth of 23.7%. Technology earnings alone

are seen jumping 65.5% from the year-ago quarter, according to

the latest available data from LSEG.

The Dow Jones Industrial Average fell 183.32 points,

or 0.35%, to 52,473.99, the S&P 500 lost 39.70 points, or

0.52%, to 7,532.70 and the Nasdaq Composite lost 313.66

points, or 1.19%, to 25,955.57.

SOLID RETAIL SALES, LOW JOBLESS CLAIMS, WEAK HOUSING DATA

A spate of economic indicators released on Thursday showed solid

core retail sales, a drop in jobless claims and surging

manufacturing activity in the Northeast.

Less positive data came from the housing sector, with a bigger

than expected drop in pending home sales and souring homebuilder

sentiment reflecting high borrowing costs and strained

affordability among would-be homebuyers.

The U.S. and Iran extended their barrage of airstrikes,

extending a week-long escalation that has all but voided last

month's truce. But Iran's release of a U.S. citizen suggested a

path remains for the two sides to avert the resumption of

all-out war.

Declining issues outnumbered advancers by a 1.07-to-1 ratio

on the NYSE. There were 276 new highs and 141 new lows on the

NYSE.

On the Nasdaq, 1,809 stocks rose and 2,861 fell as declining

issues outnumbered advancers by a 1.58-to-1 ratio.

The S&P 500 posted 38 new 52-week highs and two new lows

while the Nasdaq Composite recorded 183 new highs and 132 new

lows.