US STOCKS-Tech sells off as Nasdaq plunges more than 2%

* Tech, consumer leads S&P 500 to red
* Indexes down: Nasdaq 2.47%, S&P 1.05%, Dow 0.21%
* CVS Health gains after raising 2021 profit view

(Updates prices to early afternoon, adds Yellen comments)
By Shreyashi Sanyal and Krystal Hu
May 4 (Reuters) - The Nasdaq tumbled more than 2% on Tuesday
as steep declines in megacap growth stocks pushed Wall Street
below record trading levels, with investors seeking shelter in
more defensive parts of the market.
Highly valued technology-related companies including
Microsoft Corp MSFT.O , Alphabet Inc GOOGL.O , Apple Inc
AAPL.O , Amazon.com Inc AMZN.O and Facebook Inc FB.O fell
between 2.2% and 4.2%. The Philadelphia Semiconductor Index
SOX dropped over 2.3%.
Comments by Treasury Secretary Janet Yellen on the potential
need for rising interest rate further exacerbated the tech
selloff, as investors worry higher rates would weigh on
valuations of growth companies.
"It may be that interest rates will have to rise somewhat to
make sure that our economy doesn't overheat, even though the
additional spending is relatively small relative to the size of
the economy," she said in taped comments at a virtual event by
The Atlantic on Tuesday.
Seven out of the 11 major S&P 500 sectors were down, with
technology .SPLRCT , communication services .SPLRCL and
consumer discretionary .SPLRCD falling more than 1.7% each.
The defensive financials .SPSY , materials .SPLRCM and
energy .SPNY sectors managed to extend their gains from
Monday, rising sightly in early afternoon trading.
"When you're at all-time highs and the market pulls back,
the ones that tend to lead to the downside are often the
high-beta stocks such as technology," said Randy Frederick, vice
president of trading and derivatives for Charles Schwab in
Austin, Texas.
"When we have pauses or pullbacks people tend to move out of
growth stocks into more defensive names."
Fiscal stimulus, rapid vaccinations and the Federal
Reserve's accommodative stance have spurred a strong rebound in
the U.S. economy and pushed Wall Street to record highs this
year. The so-called "pandemic winners," however, have recently
started to fall out of favor.
By 2:05 p.m. ET (1805 GMT), the Dow Jones Industrial Average
.DJI fell 72.32 points, or 0.21%, to 34,040.91, the S&P 500
.SPX lost 44.02 points, or 1.05%, to 4,148.64 and the Nasdaq
Composite .IXIC dropped 343.71 points, or 2.47%, to 13,551.41.
The largest percentage gainer on the S&P 500 was Gartner
IT.N , which rose 12.7% after delivering better-than-expected
first-quarter earnings.
Among other stocks, CVS Health Corp CVS.N gained 4.1%
after reporting a first-quarter profit above analysts' estimates
and raising its 2021 forecast. First-quarter earnings have been largely upbeat. Average
profits at S&P 500 companies are expected to have risen 47.7% in
the quarter, compared with forecasts of a 24% growth at the
start of April, according to IBES data from Refinitiv.
Investors are also awaiting data through the week, including
the Labor Department's monthly non-farm payrolls due on Friday.
The report is expected to show a rise in job additions in April.
Declining issues outnumbered advancers for a 2.37-to-1 ratio
on the NYSE and for a 4.03-to-1 ratio on the Nasdaq.
The S&P index recorded 69 new 52-week highs and no new low,
while the Nasdaq recorded 66 new highs and 87 new lows.