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KB Home ( KBH ) falls after Q3 profit misses estimates

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Apple ( AAPL ) edges down as data shows its China sales drop in Aug

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Ford, GM slide on Morgan Stanley downgrade

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Indexes: Dow down 0.22%, S&P 500 up 0.05%, Nasdaq up 0.21%

(Updated at 9:56 a.m. ET/1356 GMT)

By Johann M Cherian and Purvi Agarwal

Sept 25 (Reuters) -

Wall Street's main indexes were mixed on Wednesday, with the

S&P 500 hovering near record highs, as investors awaited more

indicators on the state of the economy and upcoming interest

rate reductions.

The main indexes are set for monthly gains helped by a rally

sparked by the Federal Reserve's start to its policy relaxation

cycle last week that raised expectations for a soft landing.

However, a weak consumer sentiment report on Tuesday fanned some

concerns about the health of the labor market.

At 9:56 a.m., the Dow Jones Industrial Average fell

93.00 points, or 0.22%, to 42,115.22, the S&P 500 gained

3.09 points, or 0.05%, to 5,736.02 and the Nasdaq Composite

gained 37.27 points, or 0.21%, to 18,111.79.

Eight out of the 11 S&P 500 sectors trended higher with

defensive sectors such as utilities and consumer

staples among top gainers. On the flip side, energy

stocks sank to the bottom with a 0.9% loss.

Rate-sensitive stocks traded mixed. Nvidia ( NVDA )

gained 2.2%, while Apple ( AAPL ) slipped 0.4%. Sales of

foreign-branded smartphones, including iPhones,

in China fell in August

on an annual basis, data from a government-affiliated

research firm showed.

The yield on long-term Treasury bonds

ticked higher on worries that looser financial

conditions could re-ignite inflation.

Odds of a 50 basis point cut by the central bank at its

November meeting have ticked up to 59.5%, from a coin toss

earlier in the week, as per the CME Group's FedWatch Tool.

"For now the data suggests we're in a soft landing scenario.

But I wouldn't be surprised if the data changes quickly. Then

the Fed is going to have to get more or less aggressive in

cutting rates," said Adam Sarhan, chief executive officer of 50

Park Investments.

The S&P 500 and the Nasdaq are up about 20% so far this

year on rate cut expectations and optimism around artificial

intelligence. However, the S&P 500 is trading at valuations high

above longterm averages.

Data showed new home sales for August stood at 0.716

million, compared to estimates of 0.7 million as per economists

polled by Reuters.

However, the next test for markets will be weekly jobless

claims and personal consumption expenditure data for August due

later in the week.

Remarks from Fed Governor Adriana Kugler, due after markets

close, will also be parsed. But the spotlight will remain on

Chair Jerome Powell's speech at the New York Treasury Market

Conference on Thursday.

Among major movers, KB Home ( KBH ) fell 4.4% after the

homebuilder missed Wall Street expectations for third-quarter

profit, weighing on the housing index that lost 1%.

Hewlett Packard Enterprise ( HPE ) topped the S&P 500 with a

5.6% gain after Barclays upgraded the server maker's stock to

"overweight" from "equal-weight".

Ford lost 4.8% and General Motors ( GM ) fell 6% to

bottom the benchmark index after Morgan Stanley cut its rating

on the automakers.

The stocks weighed on the consumer discretionary sector

that dipped 0.6%.

Declining issues outnumbered advancers by a 1.5-to-1 ratio

on the NYSE and by a 1.62-to-1 ratio on the Nasdaq.

The S&P 500 posted 32 new 52-week highs and one new low,

while the Nasdaq Composite recorded 35 new highs and 35 new

lows.