* Microsoft gains on upbeat Q4 results
* Trump threatens tariff on $500 bln worth of Chinese goods
* Skechers dips, VF Corp gains after qtrly results
* Indexes up: Dow 0.01 pct, S&P 0.06 pct, Nasdaq 0.33 pct (Updates to open)
By Amy Caren Daniel
July 20 (Reuters) - The S&P 500 was trading flat on Friday as Microsoft's robust results helped offset escalating tariff worries after President Donald Trump said he was ready to impose levies on $500 billion worth of goods from China.
Microsoft rose as much as 3.6 percent to a record high of $108.20 after its quarterly results topped estimates on strong performance of its Azure cloud computing business.
The information technology sector rose 0.5 percent, the most among the 11 main index S&P sectors.
Shares of trade-sensitive industrial companies such as Caterpillar and 3M fell more than 1 percent and weighed on the Dow Jones Industrial Average.
GE, which rose in premarket trading after its quarterly profit fell less than expected, slipped 3.4 percent after the industrial conglomerate cut its annual cash target.
Trump's comments on tariffs, which followed the United States and China imposed tariffs on $34 billion worth of each other's goods this month, worried investors already grappling with the impact of a strengthening dollar on corporate results.
"The market does tend to react whenever there is a statement on tariffs," said Randy Frederick, vice president of trading and derivatives for Charles Schwab in Austin, Texas.
"The market was weak yesterday and often times in the absence of news to swing it to the other direction, you'll get a little bit of follow through."
But a bunch of strong earnings helped cap losses. Honeywell gained 2.2 percent after its neat quarterly profit estimates and raised its forecast on strong sales of aircraft parts and services.
As the second-quarter reporting period gains momentum, analysts forecast have risen as more companies top profit expectations.
Earnings at S&P 500 companies are forecast to have risen 21.5 percent, compared with the 20.7 percent gain seen on July 1, according to Thomson Reuters I/B/E/S.
At 10:01 a.m. EDT the Dow Jones Industrial Average was up 2.08 points, or 0.01 percent, at 25,066.58, the S&P 500 was up 1.77 points, or 0.06 percent, at 2,806.26 and the Nasdaq Composite was up 25.63 points, or 0.33 percent, at 7,850.93.
Skechers USA plunged 23.2 percent after the shoemaker posted disappointing quarterly results and forecast.
On the other hand, VF Corp rose 3.7 percent after the Vans sneaker maker reported robust quarterly results and raised its forecast.
State Street dropped 7.5 percent after the U.S. custodian bank said it would fund its $2.6 billion acquisition of investment firm Charles River Development by suspending shares buybacks and issuing new equity.
Advancing issues outnumbered decliners by a 1.00-to-1 ratio on the NYSE and for a 1.35-to-1 ratio on the Nasdaq.
The S&P index recorded 10 new 52-week highs and two new lows, while the Nasdaq recorded 61 new highs and 19 new lows. (Reporting by Amy Caren Daniel in Bengaluru; Editing by Arun Koyyur)