* Retail sales data better than expected
* Best Buy, Kroger earnings miss estimates
* Large banks show rise in credit-card defaults
* Dow flat, S&P off 0.2 pct, Nasdaq up 1 pct (Updates to midday, changes byline)
By Ryan Vlastelica
NEW YORK, Sept 15 (Reuters) - U.S. stocks were little changed on Tuesday as some retail companies' results and rising credit card defaults overshadowed government data showing stronger-than-expected retail sales last month.
U.S. retail sales rose at the fastest pace in 3 1/2 years in August, buoyed by government incentives for car sales, the Commerce Department said.
However, quarterly profit from electronics chain Best Buy Co Inc fell short of expectations, hurting retailers. The S&P Retail index slid 0.6 percent, while the company's stock fell 2.8 percent to $39.29.
Financial companies, meanwhile, reported worsening consumer credit. JPMorgan Chase & Co said its annualized credit card charge-off rate rose to 8.73 percent in August, while Discover Financial said credit card defaults hit a 26-year high.
JPMorgan fell 1.4 percent to $43.12 while Discover was off 0.9 percent to $14.90.
In addition, Capital One said accounts at least 30 days delinquent, an indicator of future loan losses, rose in August, sending its stock down 1.9 percent to $37.59.
"The retail sales data is another positive for those looking for an economic rebound, but the defaults are a wake-up call for those expecting a V-shaped recovery," said Elliot Spar, options market strategist at Stifel Nicolaus & Co in Shrewsbury, New Jersey.
"Everyone thinks that because of the stimulus and (the government's Cash for Clunkers) plan we'll have growth in the third quarter, but the economy may go back down in 2010 because of the higher default rate."
The Dow Jones industrial average slipped 4.68 points, or 0.05 percent, to 9,623.17. The Standard & Poor's 500 Index shed 1.82 points, or 0.17 percent, to 1,047.54. The Nasdaq Composite Index gained 2.3 points, or 0.11 percent, to 2,094.10.
Shares of grocery store Kroger Co sank after it reported second-quarter earnings that missed expectations and cut its full-year outlook.
Kroger shares shed 7.8 percent to $20.37 while the Dow Jones U.S. Food Retail and Wholesale index dropped 3.4 percent to 152.82.
The Nasdaq index got a boost after analysts' upgrades of eBay and Yahoo. Yahoo shares climbed 3.5 percent to $16.11 while eBay added 1.4 percent to $24.15.
Shares of Citigroup Inc fell 5.1 percent to $4.29 after sources familiar with the situation said it is in talks with U.S. officials about how to shed the roughly one-third stake the federal government acquired as part of its bailout of the company.
Federal Reserve Chairman Ben Bernanke, speaking at the Brookings Institution on the one-year anniversary of the collapse of Lehman Brothers, said the recession "is very likely over." (Reporting by Ryan Vlastelica; Editing by Kenneth Barry)