* Indexes off: Dow 0.26 pct, S&P 0.45 pct, Nasdaq 0.59 pct (Adds comments, updates to late morning trading)
By Chuck Mikolajczak
NEW YORK (Frankfurt: HX6.F - news) , May 9 (Reuters) - U.S. stocks dipped on Friday,putting the S&P 500 on track to close a week of choppy tradingon a negative note, while the Nasdaq was on pace for its worstweekly decline in four.
Apple Inc was the biggest drag on both thebenchmark S&P index and the Nasdaq 100 on news it isclose to paying a record $3.2 billion for Beats Electronics, twopeople with knowledge of the matter said, an expensive forayinto music streaming and headphone gear.
Some analysts questioned whether Beats, valued at $1 billionduring its last funding round in September, was worth thatprice. Apple shares lost 1.2 percent to $581.
"What we look for in really good companies is people thatunderstand the cash they have is the shareholders' and they useit accordingly," said Kim Forrest, senior equity researchanalyst, Fort Pitt Capital Group in Pittsburgh.
"I don't care about the $3 billion leaving Apple; what Icare about is the valuation they are putting on this littlecompany, that is what is troubling."
The S&P 500 has alternated between gains and losseseach day this week, and the Nasdaq has dropped for threestraight sessions - its longest losing streak since early April- as Internet-related stocks came under pressure. The Nasdaq ison pace for its first four-day losing streak since mid-March.
Both the Dow and S&P 500 have struggled to break throughrecent highs, with market participants citing weakness in growthnames on the Nasdaq issues and among smaller capitalized issuesas a headwind. The Russell 2000 of small-cap companiestouched correction territory with a 10 percent drop since itsMarch 9 high before bouncing slightly. A drop of that magnitudeon a closing basis could spark more investor caution.
"It's the job of investors to participate in the market andreflect what is going on, and if they think these things areoverpriced, there is information in this. We are trying tofigure out what it really means - is it a temporary lull, somepricing issues - but there is something confusing going onhere," said Forrest.
The Dow Jones industrial average fell 42.25 points,or 0.26 percent, to 16,508.72, the S&P 500 lost 8.41points, or 0.45 percent, to 1,867.22 and the Nasdaq Composite dropped 24.094 points, or 0.59 percent, to 4,027.402.
A proposed $35 billion merger of U.S.-based Omnicom GroupInc and rival France's Publicis Groupe SA (Other OTC: PGPEF - news) tocreate the world's biggest ad agency has been called off due tocomplex obstacles. Omnicom shares lost 0.6 percent to $65.78.
Gap Inc reported a 9 percent increase in comparablesales for April and the apparel company gave a profit forecastthat surpassed Wall Street expectations. Shares were up 4percent at $40.80.
Rocket Fuel Inc, tumbled 26.6 percent to $20.42after the technology provider for Web-based video advertisingforecast current-quarter revenue far below expectations,prompting downgrades from Goldman Sachs (NYSE: GS-PB - news) and BMO Capital.
Ralph Lauren Corp lost 3.8 percent to $146.26 afterthe luxury clothing house said it expected global revenues torise between 6 percent and 8 percent in fiscal 2015 but warnedits operating margin would decline.
Of 451 companies in the S&P 500 that have reported earningsthrough Friday morning, 69 percent beat expectations, above the63 percent average since 1994 and the 66 percent beat rate forthe past four quarters, according to Thomson Reuters (Frankfurt: TOC.F - news) data.
Profits are expected to rise 5.4 percent this quarter, downfrom 6.5 percent estimated at the start of the year, but abovethe low of 0.6 percent in mid-April. (Reporting by Chuck Mikolajczak; Editing by Bernadette Baum andNick Zieminski)
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