(Updates to US midafternoon trading)

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Indexes down: Dow 0.27%, S&P 500 0.09%, Nasdaq 0.04%

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Fed begins two-day policy meeting on Tuesday

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Oracle shares up on TikTok deal framework report

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Retail sales rise 0.6% in August vs 0.2% estimate

By Abigail Summerville and Sukriti Gupta

Sept 16 (Reuters) - The S&P 500 and the Nasdaq pared

earlier losses on Tuesday as caution set in ahead of an

anticipated interest rate cut from the Federal Reserve, while

declines in healthcare stocks weighed on the Dow.

Investors are largely still pricing in a 25 basis-point cut

from the U.S. central bank at the conclusion of its two-day

meeting on Wednesday, to offset the deterioration in the U.S.

labor market, evidenced by numerous recent economic indicators.

Data on Tuesday showed that U.S. retail sales increased more

than expected in August, but that did little to change rate cut

expectations.

"Any kind of resilient economic data will only reaffirm the

hawks on the FOMC ... and could give a little bit of fuel for

(Fed Chair Jerome) Powell to come out as slightly more hawkish

than the market is hoping for," said Ross Mayfield, investment

strategist at Baird Private Wealth Management.

The S&P 500 utilities and real estate

sectors lost 1.44% and 0.66% respectively, leading declines

among peers. The CBOE Volatility Index climbed to its

highest level in more than a week, and was last at 16.04

points.

Losses in UnitedHealth Group ( UNH ) and insurance company

Travelers bogged down the Dow.

At 2:20 p.m. EDT, the Dow Jones Industrial Average

fell 123.34 points, or 0.27%, to 45,760.82, the S&P 500

lost 5.87 points, or 0.09%, to 6,609.41 and the Nasdaq

Composite lost 8.96 points, or 0.04%, to 22,339.79.

There were some gains in sectors such as energy and

consumer discretionary, which were up 1.98% and 0.81%,

respectively. Tesla helped lift the consumer

discretionary sector.

Investors also brushed off news that the U.S. Senate confirmed

White House economic adviser Stephen Miran to the Fed Board and

an appeals court rejected President Donald Trump's bid to fire

Fed Governor Lisa Cook.

The S&P 500 and the Nasdaq closed at all-time highs on

Monday after hitting intraday records in multiple sessions. The

three main indexes have gained so far in September - a month

traditionally deemed bad for U.S. equities.

Webtoon Entertainment ( WBTN ) soared 37% after a deal with

Disney ( DIS ) to create a new digital comics platform to

feature content from Disney's ( DIS ) portfolio, including the Marvel

and "Star Wars" franchises.

Trump said that the U.S. and China have a deal that will keep

the short-video app TikTok operating in the U.S. CNBC, citing

sources, said Oracle will keep its TikTok cloud deal

under the new agreement. It gained 1%.

Warner Bros Discovery ( WBD ) fell 6.7%. TD Cowen downgraded the

media company's rating to "hold" from "buy."

Declining issues outnumbered advancers by a 1.26-to-1 ratio

on the NYSE and by a 1.11-to-1 ratio on the Nasdaq.

The S&P 500 posted 13 new 52-week highs and 13 new

lows, while the Nasdaq Composite recorded 75 new

highs and 55 new lows.