Stocks

US STOCKS-Wall St dips as healthcare slide offsets chip boost

(In 3rd paragraph, corrects spelling of name to Granski, notGranfki)

* Qualcomm surges on surprise settlement with Apple

* Healthcare stocks fall for 2nd straight day

* IBM falls after revenue miss

* Indexes down: Dow 0.02%, S&P 0.18%, Nasdaq 0.06%

By Amy Caren Daniel and Sruthi Shankar

April 17 (Reuters) - U.S. stocks headed lower on Wednesday,as a selloff in healthcare stocks extended for a second day,overshadowing a rally in chipmakers led by Qualcomm.

The S&P healthcare index .SPXHC tumbled 2.5%, on pace towipe out its yearly gains over concerns about potential changesto healthcare policy as 2020 presidential election looms.

"With a Democrat-controlled Congress, there is definitelymore talk on regulating the sector and drug prices, which hasnegative headline risks," said Matthew Granski, director ofstrategy at Los Angeles-based Miracle Mile Advisors.

Medical device maker Abbott Laboratories IncABT.N fell3.8%, despite quarterly results beating estimates.

UnitedHealth Group IncUNH.N , Pfizer IncPFE.N and Merck& CoMRK.N fell more than 2% and were the biggest drags on thebroader S&P 500 index.

The weakness in healthcare stocks stalled early optimismafter data showed China's economy unexpectedly steadied in thefirst quarter, assuaging concerns about a slowdown in theworld's second-largest economy amid a trade war with the unitedStates.

Chipmakers, which get a huge portion of their revenue fromChina, rallied, with the Philadelphia chip index .SOX risingmore than 1%.

The top gainer was Qualcomm IncQCOM.O , surging 10.4%after winning a major victory in its legal dispute with AppleInc AAPL.O that called for the iPhone to once again useQualcomm modem chips.

Intel CorpINTC.O , up 3.4%, said it was exiting the 5Gsmartphone modem business.

With first-quarter earnings season in full swing, analystsnow expect S&P 500 profits to have dropped 1.8% year-on-year.Though a solid improvement over recent estimates, it would stillmark the first earnings contraction since 2016.

Of the 54 S&P 500 companies that have posted results so far,about 80% have beaten estimates, according to Refinitiv data.

"Investors were overly pessimistic about Q1 earnings, and sofar you've seen a few beats and that will continue going forwardbecause there is so much of negative expectations built in,"Granfki said.

The Nasdaq 100 .NDX touched a record intraday high,surpassing the level hit in early October.

United Continental Holdings IncUAL.O advanced 4.7% aftera better-than-expected jump in quarterly profit and fueled a1.22% rise in the Dow Jones transport index .DJT .

An outlier among tech stocks was International BusinessMachines CorpIBM.N , down 3.8% after reporting abigger-than-expected drop in quarterly revenue.

At 12:55 p.m. ET, the Dow Jones Industrial Average .DJI was down 4.68 points, or 0.02%, at 26,447.98. The S&P 500 .SPX was down 5.30 points, or 0.18%, at 2,901.76 and the NasdaqComposite .IXIC was down 4.48 points, or 0.06%, at 7,995.75.

Morgan StanleyMS.N rose 2.3% after quarterly profit beatexpectations, wrapping up earnings for big U.S. banks.

PepsiCo IncPEP.O gained 3.3% after its quarterly resultsbeat Wall Street estimates.

Declining issues outnumbered advancers for a 1.26-to-1 ratioon the NYSE and for a 1.66-to-1 ratio on the Nasdaq.

The S&P index recorded 45 new 52-week highs and five newlows, while the Nasdaq recorded 61 new highs and 50 new lows. (Reporting by Amy Caren Daniel, Sruthi Shankar and ShreyashiSanyal in Bengaluru; Editing by Sriraj Kalluvila) ((Amy.CarenDaniel@thomsonreuters.com ; within U.S.+1-646-223-8780; outside U.S. +91 80 6749 9250 ; ReutersMessaging: Amy.CarenDaniel.thomsonreuters.com@reuters.net;))


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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