US STOCKS-Fears of surge in coronavirus death toll weigh on S&P, Nasdaq

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* Merck slides on warning $2.1 bln hit to FY sales
* Tech earnings in focus later in the week
* Fed's two-day policy meeting starts on Tuesday
* Dow up 0.23%, S&P 500 flat, Nasdaq off 0.77%

(Updates to early afternoon)
By C Nivedita and Shreyashi Sanyal
April 28 (Reuters) - The S&P 500 and Nasdaq indexes eased on
Tuesday as scientists warned of an increase in U.S. coronavirus
deaths if states lifted lockdowns too quickly, while healthcare
stocks slumped after a sales warning from Merck.
The drugmaker MRK.N fell 2.6% after saying it expected the
outbreak to reduce 2020 sales by more than $2 billion as a big
drop in doctors' office visits take a hefty toll. The S&P 500 healthcare index .SPXHC shed 1.4%, falling for
the first time in five days.
Microsoft Corp MSFT.O and Amazon.com Inc AMZN.O shed
nearly 2%, with investors booking profits heading into the
biggest week for first-quarter earnings for tech-related firms.
"As we go into earnings, people are getting nervous about
all the concentration in the key (technology) stocks and they
are probably taking a bit off the table," said Thomas Hayes,
managing member at Great Hill Capital LLC in New York.
Wall Street has recovered more than 30% from its March lows,
thanks to aggressive stimulus efforts and, more recently, on
signs of states moving toward partial reopening. But with U.S. coronavirus cases topping 1 million, a
predictive model often cited by White House officials showed the
outbreak could take more than 74,000 U.S. lives by August,
compared with an earlier forecast of 67,000, if the lockdown
were to be lifted too early. "There seems to be a conflict of opinion about the proper
course of action," said Andre Bakhos, managing director at New
Vines Capital LLC in Bernardsville, New Jersey.
"As more insights back the belief that opening up early is
not the best course of action right now, because if we do and if
we get a relapse, then the next wave could even be worse."
The benchmark S&P 500 index .SPX also remains 17% away
from reclaiming a record high hit in February and analysts have
warned of further declines if a deep global recession sets in.
U.S. consumer confidence tumbled in April as lockdown
measures crushed economic activity and left million of Americans
unemployed. Domestic first-quarter GDP figures are due
Wednesday, with economists expecting a contraction of 4%.

Investors are also awaiting the outcome of a two-day Federal
Reserve policy meeting, although expectations are low for more
central bank easing. The banking subindex .SPXBK rose 2.2%.
At 12:56 p.m. ET, the S&P 500 .SPX was down 0.68 points,
or 0.02%, at 2,877.80 and the Nasdaq Composite .IXIC was down
67.53 points, or 0.77%, at 8,662.63.
The Dow Jones Industrial Average .DJI was up 56.30 points,
or 0.23%, at 24,190.08, boosted by a 2.4% gain in shares of 3M
Co MMM.N .
The world's biggest maker of N95 respirator masks reported a
better-than-expected quarterly profit, although it suspended its
2020 forecast due to the health crisis. Harley-Davidson Inc HOG.N jumped 14% as it took more steps
to boost its cash reserves to deal with the drop in motorcycle
sales due to lockdowns. PepsiCo PEP.O said surging demand for Lays and Doritos
would only partially offset a hit to business in the second
quarter from coronavirus lockdowns. Shares of the company rose
0.7%. Advancing issues outnumbered decliners by a 2.61-to-1 ratio
on the NYSE and a 1.42-to-1 ratio on the Nasdaq.
The S&P index recorded 12 new 52-week highs and one new low,
while the Nasdaq recorded 48 new highs and two new lows.