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* Cisco drops after lackluster forecast
* Kraft Heinz falls on $666 mln charge, sales miss
* New coronavirus cases in China jump under new method
* Indexes: Dow down 0.25%, S&P and Nasdaq flat (Updates to early afternoon)
By Medha Singh
Feb 13 (Reuters) - Gains in defensives helped U.S. stocks bounce off session lows on Thursday, even as sentiment remained fragile after a spike in new coronavirus cases in China renewed worries over the scale of the epidemic and its likely impact.
The S&P 500 fell as much as 0.6% in early trading after China reported a record spike in deaths and thousands more infections using a new diagnosis method at Hubei, the epicenter of the outbreak.
This changed the mood on Wall Street, where a day earlier investors had bought on signs that the virus spread was slowing and helped the three main indexes close at record highs.
"The surge in reported cases today is a one-off change due to methodology and, by itself, does not imply an acceleration in the pace of infection," said Seema Shah, chief strategist at Principal Global Investors.
"However, if the change in methodology does result in a rise in the growth rate of reported cases, market sentiment will inevitably deteriorate."
Lending some support were comments from the World Health Organization's emergency measures director that infections were not rising dramatically outside China.
U.S. stocks have been particularly resilient in the face of the outbreak because the Federal Reserve and other central banks seem ready to ease monetary policies if required, said Mark Heppenstall, chief investment officer at Penn Mutual Asset Management in Horsham, Pennsylvania.
Fed Chair Jerome Powell earlier this week reiterated his confidence in the U.S. economy in his testimony to the Congress and said the central bank was monitoring the coronavirus and other threats.
At 1:26 p.m. ET, the Dow Jones Industrial Average fell 0.25% to 29,478.86. The S&P 500 ticked 0.04% lower to 3,377.96 and the Nasdaq Composite was down 0.05% at 9,720.99.
Real estate, utilities and consumer staples were the biggest percentage gainers among the 11 main S&P sectors.
Cisco Systems Inc declined more than 5%, the biggest drag on the three indexes, following the network gear maker's lackluster revenue and profit forecasts.
NetApp Inc fell about 9% as the data storage equipment maker's current-quarter profit forecast fell short of expectations.
Kraft Heinz Co shed 7% as it missed quarterly sales estimates and wrote down the value of some businesses, including coffee brand Maxwell House, by $666 million.
Declining issues outnumbered advancers for a 1.07-to-1 ratio on the NYSE and for a 1.09-to-1 ratio on the Nasdaq.
The S&P index recorded 53 new 52-week highs and three new lows, while the Nasdaq recorded 127 new highs and 49 new lows. (Reporting by Medha Singh and Sruthi Sankar in Bengaluru; Editing by Sriraj Kalluvila)