*

Microsoft ( MSFT ) gains after new share-buyback plan, dividend

hike

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Intel ( INTC ) gains following collaboration with Amazon's ( AMZN ) AWS

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Retail sales unexpectedly rise in August

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Indexes: Dow off 0.07%, S&P 500 down 0.04%, Nasdaq up

0.11%

(Updated at 2:30 p.m. ET/1830 GMT)

By Chuck Mikolajczak

NEW YORK, Sept 17 (Reuters) - U.S. stocks were little

changed on Tuesday, giving up earlier gains that had vaulted the

S&P 500 and Dow Industrial Average to record highs as investors

braced for the Federal Reserve interest-rate decision.

The benchmark S&P 500 index touched 5,670.81 earlier in the

session, after fresh economic data eased worries of a sharp

slowdown in the U.S. economy.

The latest report from the U.S. Commerce Department showed

retail sales rose unexpectedly in August, after a decline in

auto dealership receipts was offset by strength in online

purchases, suggesting the economy was on solid footing through

most of the third quarter.

"The retail sales numbers this morning (were) maybe a little

bit of an upside surprise, but still indicative of a bit of a

slowdown in the pace of consumer spending," said Jim Baird,

chief investment officer at Plante Moran Financial Advisors in

Southfield, Michigan.

"Clearly the Fed's story tomorrow is really the dominant

story and we've gone from what seemed to be a predominant view

that 25 basis points was going to be the decision to one that

increasingly looks like a larger (interest-rate) cut could be in

the offing."

Markets are pricing in a 63% chance the Fed will cut

borrowing costs by 50 bps at the conclusion of its two-day

meeting on Wednesday, according to the CME's FedWatch Tool.

Market expectations on the cut's size have been volatile in

recent days, with only a 34% chance of a 50-bps cut priced in as

of last week.

Microsoft ( MSFT ) was the biggest lift to the S&P 500, with

a 0.93% rise after the AI frontrunner's board approved a new

$60-billion share-buyback program and hiked its quarterly

dividend by 10%.

The Dow Jones Industrial Average fell 31.14 points,

or 0.07%, to 41,592.72, the S&P 500 lost 2.48 points, or

0.04%, to 5,630.61 and the Nasdaq Composite gained 19.58

points, or 0.11%, to 17,611.71.

The blue-chip Dow hit a record high for a second-straight

day. The Russell 2000 index tracking small caps, which

investors view as likely to benefit from a lower rate,

outperformed with a 0.84% rise.

Energy, up 1.31%, was the best-performing of the 11

major S&P sectors, buoyed by a climb in crude prices, while

healthcare was the worst-performing with a drop of

1.08%.

Among other movers, Intel ( INTC ) gained 2.92% after

signing Amazon.com's ( AMZN ) cloud-services unit as a customer

to make custom artificial-intelligence chips. Amazon.com ( AMZN )

advanced 1.19%.

Advancing issues outnumbered decliners by a 1.6-to-1 ratio

on the New York Stock Exchange and on the Nasdaq, advancing

issues outnumbered decliners by a 1.36-to-1 ratio.

The S&P 500 posted 48 52-week highs and no new lows while

the Nasdaq Composite recorded 135 new highs and 59 new lows.