US STOCKS-Wall St falls on U.S. debt gridlock worries

* Ford edges up on strong earnings

* Netflix falls 10 pct on bleak outlook

* Indexes off: Dow 0.6 pct, S&P 0.4 pct, Nasdaq 0.2 pct

* For up-to-the-minute market news see [STXNEWS/US] (Updates to mid-morning trade)

By Angela Moon

NEW YORK, July 26 (Reuters) - U.S. stocks fell on Tuesday as concerns about debt ceiling talks offset strong earnings from blue chip companies.

Wall Street started off little changed but soon fell in negative territory on fears that a failure to raise the U.S. debt limit by an Aug. 2 deadline would deeply damage the economy.

Ford Motor Co was up 0.5 percent at $13.24 after the automaker's second-quarter earnings beat expectations as North American sales improved. For details, see [ID:nN1E76P00N]

Cummins Inc rose 4.7 percent to $111.66 after the diesel engine maker reported higher earnings and raised its 2011 outlook. [ID:nN1E76P02M]

U.S. President Barack Obama took to the airwaves Monday night to rally support for a package proposed by Democrats, warned that failure to make a deal would severely hurt the nation. [ID:nN1E76P002] and [ID:nUSBUDGET]

"The level of confidence that a deal will be done is starting to weaken, based on last night's speeches and all of the analysis that's gone on since last night," said Hugh Johnson, chief investment officer of Hugh Johnson Advisors LLC in Albany, New York.

The Dow Jones industrial average <.DJI> was down 73.76 points, or 0.59 percent, at 12,519.04. The Standard & Poor's 500 Index <.SPX> dipped 4.79 points, or 0.36 percent, at 1,332.64. The Nasdaq Composite Index <.IXIC> was off 4.61 points, or 0.16 percent, at 2,838.19.

Stocks fell in the previous session on worries over the stalemate in Washington.

3M Co dropped 4 percent to $91.21 after the industrial conglomerate said Japan's March earthquake and tsunami reduced sales and profit margins, even as its quarterly earnings met estimates. [ID:nN1E76O0VJ]

Netflix Inc slid nearly 10 percent to $253.80, pressuring the Nasdaq, a day after the movie rental company warned its red-hot subscriber growth would cool down in the third quarter. [ID:nN1E76O1TN]

The market gained some support from data showing U.S. consumer confidence edged higher in July, though consumers remained gloomy about the current climate.

The Commerce Department reported sales of new single-family homes fell by 1 percent in June. For a wrapup on economic data, see [ID:nN1E76P0NI] (Reporting by Angela Moon; editing by Jeffrey Benkoe)