Wall Street drops with tech stocks; Netflix weighs

By Yashaswini Swamynathan

(Reuters) - U.S. stocks dropped on Tuesday morning, led by a drop in technology and consumer discretionary stocks after Netflix's weak results.

Also weighing on sentiment was the International Monetary Fund's move to cut its global growth forecasts for the next two years due to uncertainty over Britain's looming exit from the European Union.

However, strong results from J&J and UnitedHealth helped limit losses on the Dow. J&J rose 2.1 percent to a record high of $125.75, while UnitedHealth was up 0.5 percent.

The two stocks helped make the healthcare sector the only gainer, with a 0.1 percent rise, among the 10 major S&P sectors.

Goldman Sachs' results continued a market-beating streak for financials that JPMorgan kicked off last week. But, its shares were down 0.5 percent as analysts said the profit beat was not as impressive as those of its peers.

With most big banks having reported, investor focus is now on earnings from technology companies, whose stocks tend to have a big influence on the major indexes.

Netflix slumped 13 percent to $85.85 after its quarterly subscriber numbers and forecast missed estimates. It weighed the most on the Nasdaq and also dragged consumer discretionary stocks lower.

"We've had some major financial earnings which have come through and now we are waiting to follow on with tech, and that's causing a short term pause in the rally," said Jamie Cox, managing partner at Harris Financial Group in Richmond, Virginia.

At 9:41 a.m. ET (1341 GMT), the Dow Jones Industrial Average was down 23.42 points, or 0.13 percent, at 18,509.63.

The S&P 500 was down 5.71 points, or 0.26 percent, at 2,161.18.

The Nasdaq Composite was down 10.58 points, or 0.21 percent, at 5,045.20.

Microsoft, which reports after the close, was down 0.7 percent, weighing the most on tech stocks.

Following a record-breaking run that was propelled by strong economic data, corporate earnings are the catalyst that will extend or sap the momentum.

The year-on-year decline in earnings of S&P 500 components is expected to slow to 4.5 percent in the second quarter, from 5 percent in the first, according to Thomson Reuters data.

Declining issues outnumbered advancing ones on the NYSE by 1,717 to 925. On the Nasdaq, 1,312 issues fell and 934 advanced.

The S&P 500 index showed eight new 52-week highs and no new lows, while the Nasdaq recorded 19 new highs and six new lows.

(Reporting by Yashaswini Swamynathan in Bengaluru; Editing by Savio D'Souza)