* Sears soars after Amazon deal to sell Kenmore appliances

* Home Depot, Best Buy, Lowe's fall on Sears-Amazon deal

* Travelers fall after posting drop in profit

* Dow off 0.08 pct, S&P up 0.08 pct, Nasdaq up 0.16 pct (Updates to early afternoon)

By Tanya Agrawal

July 20 (Reuters) - The S&P and the Dow traded little changed in early afternoon session on Thursday, weighed by a drop in retailers and tepid earnings from some big names, while the tech-heavy Nasdaq edged higher.

Home Depot fell 4.1 percent, shaving off 42 points from the Dow and weighing the most on the S&P 500.

Sears soared as much as 24 percent after the retailer said it would sell its Kenmore home appliances on Amazon.com and integrate the brand's smart gadgets with the online giant's Alexa digital assistant.

The news dragged down fellow retailers Best Buy by 3.2 percent and Lowe's by 6 percent.

Amazon rose 0.4 percent and was the biggest boost on the Nasdaq, along with Facebook. Both the companies are due to report results next week.

Qualcomm fell 5.4 percent after the chipmaker's forecast missed estimates.

Still, overall earnings continue to beat expectations which, along with a rally in technology shares, helped all three major indexes to close at a record high on Wednesday.

Analysts are estimating an 8.6 percent rise in second-quarter earnings and a 4.6 percent increase in revenue for the S&P 500 companies from a year earlier, according to Thomson Reuters I/B/E/S.

Visa, Microsoft and eBay are due to report results after the closing bell.

"Earnings are going to surprise to the upside and so far it's been good," said Brent Schutte, chief investment strategist for Northwestern Mutual Wealth Management Company.

"I think the one thing that's changed is now we're getting revenue growth because in many cases the world is doing better. That's the big change to the economy over the past year and that's what will keep the fire burning in the future."

At 12:46 p.m. ET (1646 GMT), the Dow Jones Industrial Average was down 17.19 points, or 0.08 percent, at 21,623.56, the S&P 500 was up 2.19 points, or 0.08 percent, at 2,476.02.

The Nasdaq Composite was up 10.38 points, or 0.16 percent, at 6,395.42.

Seven of the 11 major S&P sectors were higher, with the telecommunications index's 1.44 percent rise leading the advancers.

T-Mobile gained as much as 3.3 percent after the wireless carrier's quarterly results topped analysts' estimates. Rivals Verizon rose 2 percent and AT&T 1.3 percent.

Abbott Laboratories rose 2.2 percent after the healthcare company raised its full-year profit forecast.

Property and casualty insurer Travelers was down 1.7 percent after reporting a drop in quarterly profit.

Advancing issues outnumbered decliners on the NYSE by 1,449 to 1,357. On the Nasdaq, 1,474 issues rose and 1,260 fell. (Reporting by Tanya Agrawal; Editing by Arun Koyyur)