(Updates with afternoon trading)

* Sportswear brand On tumbles after second-quarter results

* Rocket Lab ( RKLB ) drops on potential delay to Neutron debut

* S&P 500 -0.35%, Nasdaq -0.74%, Dow -0.22%

By Noel Randewich and Purvi Agarwal

Aug 11 (Reuters) - Wall Street fell on Tuesday, with Amazon ( AMZN )

and Alphabet dipping, as investors became more pessimistic about

a potential deal to bring stability to the Middle East.

The Strait of Hormuz will remain closed as long as the U.S. does

not change its behavior and accept Iran's conditions to end the

war, the newly appointed secretary of Iran's Supreme National

Security Council said.

Brent crude futures held near one-week highs in

choppy trading, while the S&P 500 energy sector index

jumped 0.9%, leading the 11 sector indexes.

"As has been the case for months, it's just really hard to

come to an agreement that works for everyone. Oil is a little

higher, pricing in more uncertainty around that," said Ross

Mayfield, investment strategy analyst at Baird in Louisville,

Kentucky.

"The market has obviously gyrated around this conflict at

times, but it hasn't been the big headwind that a lot of people

imagined it might be."

Amazon ( AMZN ) and Alphabet each fell more than

2%, while SpaceX dipped 5.2%.

Alternative asset managers rose, with Apollo Global

jumping 6.1% and Blackstone rallying 4.4%. They were

among financial institutions that recently partnered with Nvidia ( NVDA )

to establish compute-financing platforms aimed at

mobilizing more than $500 billion.

Nvidia ( NVDA ) was trading near flat.

The S&P 500 was down 0.35% at 7,725.72 points.

The Nasdaq declined 0.74% to 26,409.73 points, while the Dow

Jones Industrial Average was down 0.22% at 53,854.61 points.

Strong quarterly earnings helped lift the S&P 500 to

all-time highs last week, while the Nasdaq was down

about 2% from its record high close on June 2.

Signs that heavy investments by Microsoft and Amazon ( AMZN ) in AI

data centers are paying off have also lifted sentiment.

Consumer and producer price inflation readings, due over the

next two days, will be crucial in shaping market expectations on

the Federal Reserve's policy path, given Chair Kevin Warsh's

goal of reducing guidance on monetary policy.

Traders are split over the likelihood of an interest rate

hike at the central bank's September meeting, according to the

CME FedWatch tool.

Rising energy costs, stemming from the Iran conflict, have

spurred inflation concerns and complicated the paths of central

banks globally.

Jabil ( JBL ) added 5% after UBS upgraded the electronics

firm's stock to "buy" from "neutral."

Rocket Lab ( RKLB ) slipped 1% after appearing to push back the

timeline for the first flight of its Neutron rocket.

U.S.-listed shares of On dropped 21% after the

sportswear brand missed sales estimates.

LNG company Venture Global ( VG ) fell 7.2% after its

second-quarter revenue slightly missed estimates.

Advancing issues outnumbered falling ones within the S&P 500

by a 1.5-to-one ratio.

The S&P 500 posted 21 new highs and one new low; the Nasdaq

recorded 97 new highs and 68 new lows.