US STOCKS-Wall Street dragged down by Apple's shock sales warning

By Medha Singh

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* Apple drops after sales warning

* Walmart forecasts downbeat online sales growth

* Kroger jumps as Berkshire Hathaway reveals $549 mln stake

* Indexes down: Dow 0.78%, S&P 0.60%, Nasdaq 0.35% (Adds comment, details; updates prices)

By Medha Singh

Feb 18 (Reuters) - U.S. stocks dropped on Tuesday after a surprise sales warning from technology bellwether Apple fanned worries about the impact of the coronavirus outbreak on global supply chains.

The world's most valuable technology firm said it would fall short of its recently announced first-quarter sales target because of slower iPhone production and weaker demand in China, sending its shares down 2.4%.

The news also sent Apple suppliers, including Qualcomm Inc , Broadcom Inc, Qorvo Inc and Skyworks Solutions Inc, lower by 1.6% to 2.4%.

Chipmakers, which are heavily dependent on China for revenues, slipped with the Philadelphia SE Semiconductor index shedding 1.7%, while the broader S&P technology sector lost 0.6%.

"The market is taking it in (its) stride, meaning that they know that this virus is going to have an impact on the supply chain but the severity of the impact is still unclear," said Jeff Kravetz, regional investment strategist at U.S. Bank Wealth Management.

"But investors are not overly concerned and we're higher this year just because we've got an accommodative Fed, higher earnings and - when you exclude the impact of the virus- an incredibly resilient consumer."

While the exact hit to economic growth from the epidemic in China - the global manufacturing hub - still remains to be seen, hopes that the damage would only be temporary have helped Wall Street's main indexes clinch record highs as early as last week.

At 11:24 a.m. ET, the Dow Jones Industrial Average was down 229.57 points, or 0.78%, at 29,168.51 and the S&P 500 was 20.30 points, or 0.60%, lower at 3,359.86.

The Nasdaq Composite was down 34.39 points, or 0.35%, at 9,696.79.

Energy stocks fell 1.6%, while interest-rate sensitive banks lost 2% as higher demand for safer assets pressured U.S. Treasury yields.

Nearly 400 companies in the S&P 500 have reported fourth-quarter earnings so far, of which 70.8% beat analysts' profit estimates, according to IBES data from Refinitiv.

Walmart Inc shares rose 0.8% even after the world's biggest retailer forecast slowing online growth for the year and reported weak results for the holiday quarter.

Conagra Brands Inc shed nearly 8% after the packaged food company lowered its full-year profit and sales outlook.

Among gainers, Kroger Co climbed 5.4% after Warren Buffett's Berkshire Hathaway Inc unveiled a $549.1 million stake in the supermarket chain.

Tesla Inc jumped 5% as Bernstein and Morgan Stanley raised their prices targets for the electric carmaker's shares.

Declining issues outnumbered advancers for a 1.58-to-1 ratio on the NYSE and for a 1.42-to-1 ratio on the Nasdaq.

The S&P index recorded 63 new 52-week highs and five new lows, while the Nasdaq recorded 105 new highs and 45 new lows. (Reporting by Medha Singh and Sruthi Shankar in Bengaluru; Editing by Subhranshu Sahu)