US STOCKS-Wall St slips as FedEx offsets strong industrial data

                                
  
                                
 * FedEx shares fall on 2011 cost concerns
                                
 * Apple shares jump as iPhone sales above some estimates
                                
 * Dow off 0.3 pct, S&P off 0.4 pct, Nasdaq off 0.2 pct
 * For up-to-the-minute market news see [STXNEWS/US]
  (Updates to late afternoon)
                                
 By Edward Krudy
                                
 NEW YORK, June 16 (Reuters) - U.S. stocks slipped on
Wednesday as a warning from FedEx <FDX.N>, which said higher
costs would crimp profits next year, overshadowed a surge in
industrial production.
                                
 FedEx Corp <FDX.N>, a package delivery company viewed as a
window on the economy because of the wide range of industries
it serves, said higher costs would constrain 2011 earnings.
The warning caught investors off guard and drove the company's
shares down 5.4 percent to $78.55. [ID:nN16137197]
                                
 But strong sales from Apple Inc's <AAPL.O>, which said it
sold 600,000 of its iPhone 4 smartphones in a single day of
pre-orders, helped limit the Nasdaq's decline. Apple's stock
was up 2.4 percent at $266.05.
                                
 The market's slow grind comes a day after a sharp rally
that pushed the S&P 500 above its 200-day moving average for
the first time in a month and back into positive territory for
the year.
                                
 "The industrial production number is saying that demand is
still there, production is still there," said Marc Pado, U.S.
market strategist at Cantor Fitzgerald & Co. in San Francisco.
"That's telling me there is going to be a nice little increase
in profit margins even on flat revenue."
                                
 The Dow Jones industrial average <.DJI> dropped 26.49
points, or 0.25 percent, to 10,378.28. The Standard & Poor's
500 Index <.SPX> dropped 3.88 points, or 0.35 percent, to
1,111.35. The Nasdaq Composite Index <.IXIC> dropped 4.95
points, or 0.21 percent, to 2,300.93.
                                
Industrial output surged 1.2 percent in May, partly due to
a spike in utility production and a solid gain of 0.9 percent
 in factory output. [ID:nN16144404]
                                
 Shares of 3M Co <MMM.N>, a diversified manufacturer, rose
1.1 percent to $80.62 and ranked among the Dow's biggest
positive influences.
                                
 On the closely watched energy front, BP Plc agreed to U.S.
President Barack Obama's demand to place about $20 billion in
a special fund to pay damage claims from the Gulf of Mexico
oil spill.
                                
 The British company also said it would not pay dividends
to its shareholders this year, reduce its investment prpogram
and sell $10 billion of assets for a planned fund to cover the
costs related to its Gulf of Mexico oil spill. [ID:nN16179411]
and [ID:nN16178940].
                                
 BP's New York-traded shares shot up 1.4 percent to $31.80,
after earlier reaching an intraday high at $33.
                                
 Shares of some U.S. drillers and other energy companies
also advanced, with Halliburton Co <HAL.N> up 2.8 percent at
$26.17.
                                
 But reflecting the housing sector's struggles and the
recovery's uneven nature, the U.S. government said housing
starts fell more than expected in May. Housing starts hit a
five-month low, after a federal homebuyer tax credit expired.
                                
 The Morgan Stanley housing index <.HGX> fell 1.8 percent.
The index tracks U.S. companies in the housing sector,
including home builders like PulteGroup Inc <PHM.N> as well as
lumber companies like Weyerhaeuser Co <WY.N>.
                                
 Pulte shares slid 1.4 percent to $9.79, while Weyerhaeuser
lost 2.4 percent to $39.79.
 (Reporting by Edward Krudy; Editing by Jan Paschal)