US STOCKS-Nasdaq, S&P 500 edge higher on Amazon boost; Dow under pressure

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* Dow off 0.31%, S&P 500 up 0.08%, Nasdaq up 0.16%

* Amazon rises as Bernstein says pandemic tailwind to continue

* Tesla falls on warning of challenges of scaling up production

* Real estate, consumer discretionary lead sectoral gains (Adds comments, updates prices throughout)

By Shreyashi Sanyal and Devik Jain

Sept 22 (Reuters) - The S&P 500 and the Nasdaq edged higher on Tuesday, led by a bounce in shares of Amazon.com, while uncertainty over more U.S. fiscal stimulus kept trading in Dow constituents muted.

Amazon.com Inc jumped 2.7% after Bernstein upgraded its stock to "outperform", saying the company will continue to receive a boost from premium subscribers and third-party merchants even beyond the pandemic.

Microsoft Corp, Alphabet Inc and Facebook Inc, which together fuelled a Wall Street rally since a coronavirus-driven crash in March, rose between 0.7% and 1.8%.

"The market is looking for some stability. Once again investors and traders are going to look to names that had gotten unduly beaten up," said Kenny Polcari, managing partner at Kace Capital Advisors in Boca Raton, Florida.

Seven of the 11 major S&P 500 indexes were trading higher, with real estate and consumer discretionary leading gains.

U.S. stocks started the week on the back foot as fears about a new round of lockdowns in Europe and a stalemate in Congress over the size and shape of another coronavirus-response bill dented hopes of a swift economic recovery.

The benchmark S&P 500 ended just under 9% down from its record high on Sept. 2, floating above correction territory.

Investors are now bracing for an extended period of market volatility on concerns over growing political uncertainty in Washington that have been sharpened by the death of Supreme Court Justice Ruth Bader Ginsburg.

"Between now and the (Nov. 3 presidential) election there will be a lot of uncertainty. You will see a lot of volatility, a lot of short-term trades," said Sam Stovall, chief investment strategist at CFRA in New York.

Federal Reserve Chair Jerome Powell on Tuesday told a congressional panel that America's economy had shown "marked improvement" since the coronavirus pandemic drove it into recession, but the path ahead remains uncertain and the U.S. central bank will do more if needed.

At 11:26 a.m. ET the Dow Jones Industrial Average was down 85.05 points, or 0.31%, at 27,062.65, the S&P 500 was up 2.50 points, or 0.08%, at 3,283.56 and the Nasdaq Composite was up 17.23 points, or 0.16%, at 10,796.03.

Tesla Inc fell 6% after Chief Executive Officer Elon Musk warned about the difficulties of speeding up production as an expert cautioned the carmaker's increased reliance on large-scale aluminium parts could bring new manufacturing challenges.

Autozone Inc rose 1.3% after the auto parts retailer reported better-than-expected sales and profit for the fourth quarter.

Oracle Corp shed 1.7% on report that Beijing was unlikely to approve a proposed deal by the software maker and Walmart for ByteDance's TikTok.

Declining issues outnumbered advancers for a 1.12-to-1 ratio on the NYSE and for a 1.73-to-1 ratio on the Nasdaq.

The S&P index recorded one new 52-week highs and no new low, while the Nasdaq recorded 16 new highs and 36 new lows. (Reporting by Shreyashi Sanyal and Devik Jain in Bengaluru; Editing by Anil D'Silva)