* Deere falls on after outlook
* Empire State contracts to lowest level in four months
* PPI shows weak inflation pressure
* Indexes off: Dow 0.09 pct, S&P 0.10 pct, Nasdaq 0.05 pct
By Chuck Mikolajczak
NEW YORK, May 15 (Reuters) - U.S. stocks slipped on Wednesday, as both the Dow and S&P 500 held near their most recent record highs after a flurry of economic data did little to upset investor expectations for central bank policies.
Data showed activity in New York state's manufacturing sector unexpectedly contracted to its lowest level in four months, falling to minus 1.43 from 3.05 in April, and below expectations for an increase to 4.
In addition, industrial production fell 0.5 percent in April, more than the expected 0.2 percent decline for the month.
But a separate report showed producer prices recorded their largest drop in three years in April, falling by a seasonally adjusted 0.7 percent, the biggest decline since February 2010, which should enable the Federal Reserve to maintain its accommodative monetary policy.
Both the Dow Jones Industrial Average and the S&P 500 had rallied to fresh record highs in the prior session as investor expectations central bank stimulus measures will continue to support further equity market gains.
Stimulus actions taken by central banks around the globe have helped spur the S&P 500 to a 15.6 percent gain for the year, while the Dow has jumped 16 percent.
"This can continue as long as the policy remains tilted towards pushing investors at the margin towards riskier assets and that is essentially what it is," said Chris Wolfe, chief investment officer for Merrill Lynch Wealth Management Private Banking and Investment Group in New York.
"Data like today coupled with Chinese data recently suggests that we may be in an uncertain period and policy kind of stays where it is."
The Dow Jones industrial average dipped 14.06 points, or 0.09 percent, to 15,201.19. The Standard & Poor's 500 Index shed 1.70 points, or 0.10 percent, to 1,648.64. The Nasdaq Composite Index lost 1.89 points, or 0.05 percent, to 3,460.72.
Industrial shares declined, weighed down by a 4.2 percent drop in Deere & Co to $89.77 after the agricultural equipment maker said it was cautious because of weakness in the construction market. The S&P industrial sector index lost 0.3 percent.
The NAHB/Wells Fargo Housing Market index gained to 44 from a downwardly revised 41 in April and above the 43 forecast, according to data from the National Association of Home Builders, inching closer to the 50 mark which indicates builders see market conditions in a more favorable light.
An improving housing market has been seen as a tailwind to the economic recovery.
Macy's advanced 1 percent to $47.84 after the retailer reported higher first-quarter profit and sales, and raised its quarterly dividend 25 percent.
SunPower Corp shares jumped 14.1 percent to $21.71 after the maker of solar panels and solar power plants said it expects to post an adjusted profit for the current quarter.