US STOCKS-Wall Street trades flat, but set for weekly gain

* Disney drops after strong run up to results
* PayPal extends rise as brokerages upbeat after investor
day
* Energy stocks slide as oil prices drop on demand fears
* Indexes: Dow down, S&P flat, Nasdaq up 0.16%

(Adds byline, dateline, afternoon prices)
By Herbert Lash
NEW YORK, Feb 12 (Reuters) - The S&P 500 and Nasdaq traded
sideways on Friday in a tight range, with investors buying
energy, financial and materials shares and selling big tech
stocks as they wait for progress on new fiscal aid from
Washington to spur the market to new highs.
The S&P energy sector .SPNY , financials .SPSY and
materials .SPLRCM all rose on expectations they will benefit
from a reopened economy.
Heavyweights Apple Inc AAPL.O , Tesla Inc TSLA.O and
Microsoft Corp MFST.O , each down, held the major indexes back
as they headed for second straight week of gains.
Value and cyclicals outperform in a rising interest rate,
higher-growth environment, which the U.S. economy is on the cusp
of entering, said Thomas Hayes, chairman and managing member of
hedge fund Great Hill Capital LLC in New York.
"We're under-estimating the lag effect of all the money in
the system as more and more vaccinations are delivered and as
more of the country reopens" from business shutdowns, he said.
"We are continuing this rotation that would be consistent
with the new business cycle, and as (bond) yields go up, value
and cyclicals will lead," Hayes said.
A sharp drop in new COVID-19 cases and hospitalizations in
recent weeks have helped drive markets to new highs, though a
near-term pullback could occur from the new coronavirus variants
and potential snags in vaccine distributions.
The latest data showed U.S. consumer sentiment unexpectedly
fell in early February as households remained worried about the
economy despite expectations for additional fiscal stimulus.
A Reuters poll showed the U.S. economy is expected to reach
pre-COVID-19 levels within a year as the proposed $1.9 trillion
fiscal bill helps boost economic activity, but it's likely to
take more than a year for employment to fully recover.
U.S. President Joe Biden turned to a bipartisan group of
local officials for support on his $1.9 trillion coronavirus
relief plan to help millions of unemployed workers and for
schools to reopen. The Lipper data late on Thursday showed U.S.-based stock
funds attracted $22.9 billion in the week to Wednesday, the
largest weekly inflow since March 2008. U.S. stock markets will be closed on Monday on account of
the U.S. Presidents Day holiday.
By 2:15 p.m. ET, the Dow Jones Industrial Average .DJI
fell 62.79 points, or 0.2%, to 31,367.91, the S&P 500 .SPX
lost 0.79 points, or 0.02%, to 3,915.59 and the Nasdaq Composite
.IXIC added 0.82 points, or 0.01%, to 14,026.59.
The small-cap index .RUT was set to rise for the fifth
week out of six full weeks this year. PayPal Holdings Inc
PYPL.O rose about 4.2% as several brokerages raised price
targets on the stock a day after the payments company's investor
day call.
Walt Disney Co DIS.N reported a surprise quarterly profit.
However, its shares fell 1.8% from a record high after a more
than 13% run up to its results over the last two weeks.
Dating app operator Bumble Inc BMBL.O gained 14%, a day
after a stellar debut sent its shares up more than 75%.
Cannabis company Aphria Inc APHA.O gained 7% after nearly
halving in value in the prior session.
Advancing issues outnumbered declining ones on the NYSE by a
1.07-to-1 ratio; on Nasdaq, a 1.06-to-1 ratio favored advancers.
The S&P 500 posted 48 new 52-week highs and no new lows; the
Nasdaq Composite recorded 233 new highs and 13 new lows.