* Wells Fargo net interest margin drops, profit jumps
* Boeing falls as Dreamliner hit by two more incidents
* Best Buy shares rally after holiday sales report
* Indexes: Dow flat, S&P off 0.2 pct, Nasdaq off 0.1 pct
By Angela Moon
NEW YORK, Jan 11 (Reuters) - U.S. stocks edged lower on Friday after Wells Fargo & Co, the first major bank to kick off fourth-quarter earnings season for the financial sector, reported a decline in net interest margin despite a record profit in the latest quarter.
Wells Fargo, the fourth-biggest U.S. bank and the nation's largest home lender, said its fourth-quarter net interest margin - a key measure of how much money banks make from loans - fell, even as profit jumped 24 percent. The bank also made fewer mortgage loans than in the third quarter.
"It (Wells Fargo results) is weighing on the sector. We are keeping our fingers crossed that this won't be a sector thing and more confined to Wells Fargo, but it's definitely playing a factor today," said Larry Peruzzi, senior equity trader at Cabrera Capital Markets LLC in Boston.
The bank's shares fell 1.4 percent to $34.92. The S&P 500 financial sector index fell 0.6 percent and the KBW Banks index fell 1 percent. Bank of America Corp, JPMorgan Chase & Co and Citigroup Inc are due to report results next week.
Overall earnings were expected to grow by 1.9 percent in this earnings season, according to Thomson Reuters data.
The Dow Jones industrial average was up 6.12 points, or 0.05 percent, at 13,477.34. The Standard & Poor's 500 Index was down 2.37 points, or 0.16 percent, at 1,469.75. The Nasdaq Composite Index was down 2.19 points, or 0.07 percent, at 3,119.56.
Also keenly watched Friday were shares of Dow component Boeing, which fell 2.6 percent to $75.11 after a cracked cockpit window and an oil leak on separate flights in Japan compounded safety concerns about its new 787 Dreamliner. The U.S. Department of Transportation said the jet would be subject to a review of its critical systems by regulators.
Best Buy shares rallied after its results showed a bit of a turnaround in its U.S. stores, though same-store sales were flat during the key holiday season. Shares jumped 12 percent to $13.69.
Basic materials shares were pressured after China's annual consumer inflation rate picked up to a seven-month high, narrowing the scope for the central bank to boost the economy by easing monetary policy. The S&P basic materials sector fell 0.6 percent.
Dendreon Corp shares jumped 14.7 percent to $5.85 after Sanford C. Bernstein upgraded the drugmaker's stock to "outperform" from "market-perform" and said it could be one of the best performers in 2013.