US STOCKS-Nasdaq, S&P 500 higher; Dow dragged down by Walt Disney

* July ADP numbers smallest increase since April

* June trade deficit widens

* Timing of rate hike not decided: Fed's Powell to CNBC

* Walt Disney falls after cutting cable unit profit forecast

* Dow down 0.08 pct, S&P up 0.31 pct, Nasdaq up 0.76 pct (Updates to early afternoon)

By Tanya Agrawal

Aug 5 (Reuters) - The S&P 500 and the Nasdaq composite were higher on Wednesday as weak private sector hiring tempered expectations of a September interest rate hike, while the Dow Jones industrial average was weighed down by Walt Disney.

Walt Disney's shares fell as much as 10 percent to $109.50, after the company cut profit forecast for its cable networks unit, spooking the entire industry.

The ADP National Employment Report showed private employers added 185,000 workers in July, the smallest growth since April and lower than the 215,000 increase forecast by economists surveyed by Reuters.

The weaker-than-expected data indicates that the economy lost some momentum at the start of the third quarter and reduces expectations of a strong reading in the government's payrolls report due Friday.

"I don't think the Fed is ready to raise rates and is looking for reasons to not raise," Stansberry trading analyst Jeff Clark said.

"The data supports the idea that the economy isn't overheating and so there isn't an overwhelmingly compelling reason for the Fed to raise rates in September."

In other economic data, trade deficit widened in June as solid domestic demand in the second quarter and a strong dollar sucked in imports of food and automobiles.

Some economists have said a bunch of tepid economic reports - released in the last few days - could prompt the U.S. Federal Reserve to hold back on a rate hike until December.

The Fed has said it needs to see a sustained recovery before it raises rates for the first time in nearly a decade.

Stock market investors are keeping a close eye on economic data and the Fed's statements as a rate hike would increase cost of borrowing for companies, leading to lower profits.

They got some succor on Wednesday when Fed Governor Jerome Powell told CNBC that the central bank's policymakers had not yet decided whether to raise rates in September.

At 12:46 p.m. ET (1646 GMT) the Dow Jones industrial average was down 14.79 points, or 0.08 percent, at 17,535.9, the S&P 500 was up 6.54 points, or 0.31 percent, at 2,099.86 and the Nasdaq Composite was up 38.84 points, or 0.76 percent, at 5,144.39.

Lending support to the market was a bounce in Apple (NasdaqGS: AAPL - news) shares, which dragged the market lower on Tuesday. The iPhone maker's shares were up 1.5 percent at $116.36.

Eight of the 10 major S&P sectors were higher, with the technology index's 1.19 percent rise leading the advancers. The consumer discretionary index lagged as Walt Disney weighed, while the energy index fell as gains in oil prices remained muted.

Investors will assess earnings reports from a number of companies on Wednesday, including Tesla Motors (Xetra: A1CX3T - news) , GoDaddy , Fitbit (NYSE: FIT - news) and CBS.

Etsy (Other OTC: ETSYF - news) slumped 22 percent to $15, a day after the crafts shopping website operator's quarterly loss doubled due to higher marketing expenses.

Handbag maker Kate Spade rose 6.7 percent to $22.09 after same-store sales beat estimates.

Time Warner (Xetra: AOL1.DE - news) fell 7.2 percent to $81.39 after the company left its 2015 earnings forecast unchanged.

Advancing issues outnumbered decliners on the NYSE by 1,510 to 1,450. On the Nasdaq, 1,645 issues rose and 1,077 fell.

The S&P 500 index showed 53 new 52-week highs and 23 new lows, while the Nasdaq recorded 125 new highs and 81 new lows. (Reporting by Tanya Agrawal; Editing by Saumyadeb Chakrabarty)