* Indexes: Dow up 0.2%, S&P 500 down 0.4%, Nasdaq down 1%

* Memory-chip makers lead losses

* UnitedHealth ( UNH ) rises after 2026 profit forecast raise

* GE Aerospace falls despite lifting 2026 forecast

(Updates after markets open)

By Ragini Mathur and Avinash P

July 16 (Reuters) - The S&P 500 and the Nasdaq fell on

Thursday as renewed weakness in chip stocks overshadowed an

upbeat start to second-quarter earnings, while investors parsed

fresh economic data for clues on the health of the economy.

Semiconductor stocks extended losses from the previous

session. The Philadelphia SE Semiconductor index fell

3.8%.

U.S.-listed shares of TSMC fell 2.5%, even after the

advanced AI chipmaker reported stellar results, ramping up

volatility in the market.

Memory-chip makers were among the biggest laggards, with

Western Digital ( WDC ) and Seagate Technology ( STX ) down 7.3%

each, while Micron Technology ( MU ) fell 4.8%.

Chip stocks were earlier among the biggest beneficiaries of

this year's rally, as optimism around AI spending by

hyperscalers helped drive Wall Street to record highs.

Shiraz Ahmed, founder and CEO at Sartorial Wealth Inc, said

the chip rally is cooling off, but not because AI is losing

steam, but because AI adoption still isn't fully widespread yet.

As a result, heavy capex spending continues across the AI

ecosystem, from energy to semiconductors.

The benchmark S&P 500 has risen more than 10% this

year and remains close to its June record closing high, leaving

the rally vulnerable to any disappointment.

The consumer staples sector was leading gains on

the benchmark with a 2.1% rise, while a 1.9% fall in the

information technology sector muted gains on the rest

of the index.

Investors parsed June retail sales datathat showed only a

marginal rise as lower gasoline prices weighed on receipts at

service stations. Still, bargain-hunting consumers continued to

support underlying spending.

"Slower headline retail sales growth is actually positive,

mainly because it reflects lower gasoline prices, not weaker

consumer demand," said Bill Adams, chief U.S. economist at Fifth

Third Commercial Bank.

"The report is constructive for second-quarter real GDP."

Separately, weekly jobless claims fell to 208,000 for the

week ended July 11, below economists' expectations.

Benign inflation reportsfor June earlier this week reduced

worries over tighter Federal Reserve policy.

Markets are currently pricing in about 88% likelihood that

the Fed will stay on hold at this month's monetary policy

meeting, according to CME's FedWatch tool.

At 09:50 a.m. ET, the Dow Jones Industrial Average

rose 82.28 points, or 0.16%, to 52,740.92, the S&P 500

lost 29.56 points, or 0.39%, to 7,542.84 and the Nasdaq

Composite lost 262.08 points, or 1.00%, to 26,007.14.

The latest in a slate of upbeat quarterly results,

UnitedHealth ( UNH ) raised its 2026 profit forecast, sending

shares of the healthcare giant up 7.8% and kept the Dow afloat.

The healthcare sector was up 2%.

Meanwhile, geopolitical risks remained in focus as U.S.-Iran

tensions simmered.

Iran has asked Yemen's Houthi movement to stand ready to

close the Red Sea oil route if the U.S. strikes Iranian power

infrastructure, sources told Reuters, posing a fresh threat to

global energy supplies.

United Airlines fell 2.8% as a renewed surge in oil

prices weighed on its third-quarter and full-year profit

outlooks.

GE Aerospace dipped 4.4%, despite the jet-engine

maker lifting its 2026 profit forecast.

Advancing issues outnumbered decliners by a 1.02-to-1 ratio

on the NYSE, while declining issues outnumbered advancers by a

1.55-to-1 ratio on the Nasdaq.

(Reporting by Ragini Mathur and Avinash P in Bengaluru; Editing

by Maju Samuel and Devika Syamnath)