US STOCKS-Oil slide drags on Wall St; S&P poised for best week of 2016

* Data points to firming inflation trends

* Crude falls 4 pct; energy leads losses

* Applied Materials (NasdaqGS: AMAT - news) jumps on outlook, props Nasdaq (NasdaqGS: NDAQ - news)

* Dow down 0.36 pct, S&P down 0.22 pct, Nasdaq up 0.23 pct (Updates to late afternoon)

By Lewis Krauskopf

Feb 19 (Reuters) - Wall Street dipped on Friday, hurt by a drop in oil prices and disappointing earnings from Nordstrom, while investors digested inflation data that could raise prospects for further interest rate hikes this year.

The Nasdaq edged higher, helped by a 7.9 percent rise in Applied Materials after the chip equipment provider gave a strong profit and revenue forecast for the current quarter.

The major indexes stayed on track for their best weekly performances this year, with the Nasdaq on pace for its strongest week since July.

The S&P 500 remains down 6.4 percent this year, hurt by oil's prolonged slide and fears of China-led slowdown in the global economy.

Oil prices, which have been tightly tied to the performance of equities, fell 4 percent as record high U.S (Other OTC: UBGXF - news) . crude stockpiles heightened supply concerns. Energy shares were the worst-performing S&P sector, dropping 1.3 percent.

Nordstrom shares dropped 6.4 percent after the department store operator's quarterly profit missed expectations. On Thursday, Wal-Mart Stores' tepid sales outlook weighed on stocks.

"We have seen oil come back off and that has put some pressure on the market," said Walter Todd, chief investment officer at Greenwood Capital Associates in Greenwood, South Carolina. "Some of these earnings that we have gotten out of the past couple of days from retailers have not exactly been confidence-inspiring."

The Dow Jones industrial average was down 58.55 points, or 0.36 percent, to 16,354.88 and the S&P 500 had lost 4.14 points, or 0.22 percent, to 1,913.69. The Nasdaq Composite had added 10.21 points, or 0.23 percent, to 4,497.75.

Rising rents and healthcare costs lifted underlying inflation in January, data showed on Friday, in a sign of a pick-up in price pressures that could allow the Federal Reserve to gradually raise rates this year.

Recent economic data related to industrial production and the labor market have encouraged investors about the strength of the U.S. economy.

Other corporate earnings reports dragged on stocks. Deere & Co shares fell 4.2 percent to $76.94 after the tractor maker cut its fiscal-year sales and profit outlook. Shares (Berlin: DI6.BE - news) of rival Caterpillar (NYSE: CAT - news) fell 1.3 percent.

Trinity Industries slumped 22.1 percent to $16.45 after the railcar maker's forecast missed expectations.

Declining issues outnumbered advancing ones on the NYSE by 1,606 to 1,403, for a 1.14-to-1 ratio; on the Nasdaq, 1,621 issues rose and 1,107 fell for a 1.46-to-1 ratio favoring advancers.

The S&P 500 posted 9 new 52-week highs and 4 new lows; the Nasdaq recorded 20 new highs and 43 new lows.

(Reporting by Lewis Krauskopf in New York; additional reporting by Abhiram Nandakumar and Yashaswini Swamynathan in Bengaluru; Editing by Savio D'Souza)