US STOCKS-Wall St muted as Mideast truce doubts, economic data keep investors on edge

* Indexes down: Dow 0.11%, S&P 500 0.09%, Nasdaq 0.21%

* February PCE at 2.8% on annual basis, meets estimates

* Applied Digital (APLD) falls after quarterly loss widens

* Constellation Brands (STZ) jumps after smaller drop in Q4 sales (Updates after markets open)

By Purvi Agarwal and Avinash P

April 9 (Reuters) - Wall Street's main indexes inched lower on Thursday after rallying in the previous session as doubts around the state of a two-week Middle East ceasefire kept risk sentiment in check, while investors parsed an in-line inflation reading.

President Donald Trump vowed to retain military assets in the Middle East until a peace deal was reached with Iran and warned of a major escalation if it failed to comply, while Israel bombed more targets in Lebanon as Tehran warned there would be no deal unless Tel Aviv ceases bombing the country.

Few signs of traffic moving through the Strait of Hormuz heightened uncertainty around energy shipments, leading to a rebound in oil prices, though they remained below $100 a barrel.

The S&P 500 energy sector added 1.3% and utilities stocks were the biggest percentage gainers, up 1.6%.

"Moving from the brink of a continued escalation in Iran to a more diplomatic approach has calmed markets down from some perspective," said Charlie Ripley, senior investment strategist for Allianz Investment Management.

At 10:04 a.m. ET, the Dow Jones Industrial Average fell 48.96 points, or 0.11%, to 47,856.44, the S&P 500 lost 5.15 points, or 0.09%, to 6,777.00 and the Nasdaq Composite lost 45.85 points, or 0.21%, to 22,585.96.

Tech stocks on the S&P 500 were the biggest weights, with Microsoft (MSFT) and Apple (AAPL) falling 1.7% and 0.7%, respectively. Software stocks came under pressure with the iShares Expanded Tech-Software ETF down 3.3%.

Consumer discretionary stocks were supported by a 1.7% gain in Amazon.com (AMZN) after its CEO said AI services at its cloud-computing unit were generating annualized revenue of over $15 billion.

The S&P 500 and the Nasdaq posted their biggest one-day jumps in over a week on Wednesday, as global markets cheered the two-week ceasefire, while the Dow marked its steepest rise in a year.

Meanwhile, data showed U.S. inflation increased as expected in February and likely rose further in March amid the Iran war, while economic growth slowed more than previously estimated in the fourth quarter.

"(This doesn't) really change the narrative from a Fed perspective in that we have elevated inflation pressures, so that is going to keep them on hold for the time being," said Ripley.

Friday's consumer prices index number for March will grab the spotlight as investors wait to see the economic impact of elevated oil prices stemming from the conflict.

Money market participants are expecting only about 30% chances of a 25 basis-point interest rate cut by end-2026, compared with a 56% chance a day ago, per LSEG-compiled data.

They expected two cuts this year before the war broke out, while bets for a rate hike in December had also risen during the conflict.

Among movers, Constellation Brands (STZ) jumped 5% after the Corona beer maker posted a smaller-than-expected drop in fourth-quarter sales.

Applied Digital (APLD) shares dropped 7.1% after the data center operator's third-quarter net loss widened from a year earlier.

Declining issues outnumbered advancers by a 1.15-to-1 ratio on the NYSE and by a 1.59-to-1 ratio on the Nasdaq.

The S&P 500 posted 37 new 52-week highs and 16 new lows while the Nasdaq Composite recorded 64 new highs and 84 new lows. (Reporting by Purvi Agarwal, Avinash P and Sruthi Shankar in Bengaluru; Editing by Shinjini Ganguli and Devika Syamnath)