US STOCKS-Energy, healthcare stocks drag Wall Street lower

© Reuters. US STOCKS-Energy, healthcare stocks drag Wall Street lower

* Micron gains on bullish brokerage comment

* Microchip provides upbeat sales outlook

* Energy stocks slide as oil drops 1%

* Indexes: Dow down 0.26%, S&P off 0.23%, Nasdaq flat

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By Sruthi Shankar and Susan Mathew

Jan 7 (Reuters) - Wall Street's main indexes fell on

Tuesday, dragged down by oil and healthcare stocks as investors

nervously awaited further developments on the U.S.-Iran

conflict.

Energy stocks .SPNY were down 0.9% as oil prices

surrendered gains made over the previous days, while healthcare

stocks .SPXHC fell 0.6%, led by Merck MRK.N that was hit by

mixed results in its Phase 3 trial of a cancer drug.

Equity markets have been trying to shake off concerns from

escalating tensions between Washington and Tehran after the

killing of a top Iranian general last week by the United States.

After closing higher on Monday and steadying into the open

on Tuesday, U.S. stocks lost momentum again.

"The reason why we are modestly negative here is obviously

the tension in the Middle East and the noise coming out around

it," said Phil Blancato, chief executive officer of Ladenburg

Thalmann Asset Management in New York.

"I think the market is being very patient here, just waiting

for news from one side or the other and if there is any kind of

retaliatory issue with the US. It is not a significant move."

Latest data showed new orders for U.S.-made goods fell in

November, pulled down by steep declines in demand for machinery

and transportation equipment, pointing to sustained weakness in

manufacturing. However, another reading on the non-manufacturing sector

activity for November came in slightly better than expected.

Helping the tech-heavy Nasdaq .IXIC outperform on Tuesday

was Micron Technology Inc MU.O , which rose 6% after Cowen & Co

upgraded the chipmaker to "outperform" on an

earlier-than-expected recovery in the memory market.

The brokerage also raised its rating on hard-disk maker

Western Digital Corp WDC.O to "outperform". Its shares rose

5.2%.

Another bright spot in the semiconductor space was Microchip

Technology MCHP.O , which rose 5.1% after raising the mid-point

of its sales forecast for the third quarter.

At 10:21 a.m. ET, the Dow Jones Industrial Average .DJI

was down 74.66 points, or 0.26 percent, at 28,628.72, the S&P

500 .SPX was down 7.42 points, or 0.23 percent, at 3,238.86

and the Nasdaq Composite .IXIC was up 2.63 points, or 0.03

percent, at 9,074.09.

Market participants are also awaiting the fourth-quarter

reporting season, which begins in earnest next week. Earnings

for S&P 500 companies are expected to dip 0.5%, the second

consecutive quarter of decline, according to Refinitiv IBES

data.

Goldman Sachs Group Inc GS.N rose 1.3% after the Wall

Street bank said it has overhauled its main business units ahead

of its quarterly results next week. Shares in Apache Corp APA.N jumped 20.3% after it and

France's Total TOTF.PA said they made a major oil discovery

offshore Suriname with the closely watched Maka-Central 1 well.

Tesla Inc TSLA.O gained 2% after the company launched its

Model Y electric sports utility vehicle at its new Shanghai

factory. Declining issues outnumbered advancers for a 1.61-to-1 ratio

on the NYSE and a 1.38-to-1 ratio on the Nasdaq.

The S&P index recorded 24 new 52-week highs and one new low,

while the Nasdaq recorded 57 new highs and six new lows.