* Yellen says gradual hikes should continue despite weak inflation
* Technology stocks rebound, led by Apple
* Darden Restaurants drops on disappointing outlook
* Indexes up: Dow 0.04 pct, S&P 0.04 pct, Nasdaq 0.05 pct (Updates to early afternoon)
By Sruthi Shankar
Sept 26 (Reuters) - U.S. stocks were little changed in early afternoon trading on Tuesday after Fed Chair Janet Yellen backed the central bank's plan to raise interest rates gradually, boosting the prospects of a December rate hike.
Yellen said it would be imprudent to leave rates on hold until inflation reached the 2 percent target and that she saw "considerable" odds that inflation won't stabilize at that level over the next few years.
However, Atlanta Fed Chief Raphael Bostic said he would want "clear evidence" that prices were firming before committing to another rate increase.
Chances of a rate hike in December rose to 76 percent from just about 38 percent a month ago, according to CME Group's FedWatch tool.
"The Fed is in a bit of a quandary," said Phil Blancato, chief executive of Ladenberg Thalmann Asset Management in New York.
"The market is concerned about the Fed being aggressive, perhaps pushing us to a place where we don't want to be, whether it's an inverted yield curve or recession".
Economic data showed U.S consumer confidence fell in September while home sales dropped to an eight-month low in August due to the impact of Hurricanes Harvey and Irma.
At 12:48 p.m. ET (1648 GMT), the Dow Jones Industrial Average was up 9.46 points, or 0.04 percent, at 22,305.55, the S&P 500 was up 1.12 points, or 0.04 percent, at 2,497.78 and the Nasdaq Composite was up 3.39 points, or 0.05 percent, at 6,373.99.
Rising tensions between the United states and North Korea also weighed on the sentiment.
North Korea boosted defenses on its east coast, a South Korean lawmaker said, following Pyongyang's threat to shoot down U.S. bombers flying near the peninsula.
Seven of the 11 major S&P sectors were lower, with telecom services index's 0.35 percent leading the decliners.
Technology sector's 0.34 percent rise led the gainers. The sector had taken a beating on Monday, recording its worst daily performance in five weeks, on increasing worries that some of the high-flying tech stocks were falling out of favor.
Apple rose 1.3 percent, posting its first rise after four sessions of losses and propping up the three major indexes, after Raymond James raised its price target.
Darden Restaurants fell more than 6 percent after the Olive Garden parent said it expected the negative effects on sales and earnings from Hurricane Irma to be about double that of Hurricane Harvey.
Red Hat rose 3.70 percent after the Linux distributor's quarterly profit came in above estimates and the company raised its full-year forecast.
Advancing issues outnumbered decliners on the NYSE by 1,612 to 1,185. On the Nasdaq, 1,598 issues rose and 1,232 fell. (Reporting by Sruthi Shankar in Bengaluru; Editing by Anil D'Silva)