* Walmart drops after holiday-qtr profit misses estimates
* Consumer staples lead laggards on the S&P
* S&P 500 comes off best week in 5 years
* Indexes down: Dow 0.32 pct, S&P 0.17 pct, Nasdaq 0.01 pct (Updates to open)
By Sruthi Shankar and Aparajita Saxena
Feb 20 (Reuters) - The S&P and the Dow slipped after six straight days of gains on Tuesday, hurt by disappointing quarterly results from Walmart and a rise in bond yields.
Shares of the world’s biggest brick-and-mortar retailer fell more than 9 percent after the company reported a lower-than-expected profit and posted a sharp drop in online sales growth during the holiday period.
Target dipped 2.6 percent, while Costco Wholesale dropped 1.6 percent, dragging the S&P consumer staples index down 1.62 percent.
Amazon was up 0.9 percent.
Other big decliner was Qualcomm, which fell nearly 4 percent after the chipmaker raised its offer to buy NXP Semiconductors NV to $127.50 per share from $110. NXP shares rose 6.2 percent.
“The markets were indicating a lower open last night and an increase to the downside came after Walmart reported an earnings miss. We’re also seeing yields move up above the 2.80/2.91, and that has markets a little bit concerned,” said Robert Pavlik, chief investment strategist at SlateStone Wealth in New York.
At 9:37 a.m. ET, the Dow Jones Industrial Average was down 0.32 percent at 25,138.98 and the S&P 500 fell 0.17 percent to 2,727.46. The Nasdaq Composite was down just 0.01 percent, at 7,238.57.
The S&P 500 racked up its biggest weekly increase in five years last week, easing fears that a deeper market correction was taking hold after a handful of large daily losses at the start of February.
The spark for those falls was a rise in U.S. bond yields, however, and benchmark 10-year Treasury bond yields hit four-year highs of 2.8950 percent on Tuesday.
The S&P financial index was up 0.7 percent, led by gains in Wells Fargo and JPMorgan & Chase.
“The market views rising interest rates as potentially getting a little bit ahead of themselves. The bond market is oversold, the yield environment is overbought, but that has not stopped the slowdown in equities,” said Pavlik.
Minutes from the Federal Reserve’s January meeting on Wednesday will be at the center of this week’s trade, eyed for more clues on the central bank’s view on inflation and the pace of future interest rate increases.
Traders are pricing in an 83.1 percent chance that the Fed will raise its main rates again in March, according to the CME Group’s FedWatch tool.
Wall Street’s fear gauge, the CBOE volatility index, also edged up to 20.9, slightly above Friday’s close of 19.46, but way off the 50 points it hit during the peak of the sell-off.
Rite Aid rose 6.3 percent after grocery chain operator Albertsons Companies said it would buy the part of the drug retailer that is not being bought by Walgreens Boots .
Snapchat operator Snap slid 5.4 percent after Citigroup downgraded the stock to “sell”, arguing negative reviews on an app redesign might lead to a decline in users.
Home Depot rose nearly 1.6 percent after the largest U.S. home improvement chain’s quarterly profit beat market estimates for the sixth straight quarter.
Of the 399 companies in the S&P 500 that reported fourth quarter earnings through Friday, 76.4 percent have topped profit expectations, according to Thomson Reuters I/B/E/S. That is above the average 72 percent beat-rate over the past four quarters.
Declining issues outnumbered advancers on the NYSE by 1,617 to 980. On the Nasdaq, 1,550 issues fell and 956 advanced. (Reporting by Sruthi Shankar and Aparajita Saxena in Bengaluru; editing by Patrick Graham and Anil D’Silva)