* Factory activity slows in April, raw material costs rise
* Trump postpones steel tariffs on Canada, EU, Mexico
* Pfizer sinks on biggest sales miss in four quarters
* Apple gains ahead of results, boosts tech sector
* Indexes down: Dow 1.1 pct, S&P 0.53 pct, Nasdaq 0.06 pct (Updates to early afternoon)
By Sruthi Shankar
May 1 (Reuters) - U.S. stocks fell on Tuesday, driven by Pfizer's discouraging results, tumbling oil prices and growing fears that tariffs and inflation could weigh on corporate profits.
Data showed U.S. factory activity slowed for a second straight month in April, weighed down by shortages of skilled workers and rising capacity constraints, but strengthening global demand continued to support manufacturing.
The Institute for Supply Management survey also showed a jump in raw material costs, with steel and other prices increasing due to tariffs imposed by the Trump administration.
U.S. Commerce Secretary Wilbur Ross said the Trump administration was prepared to levy tariffs on China if an American delegation heading to Beijing did not reach a settlement on trade imbalances.
The news came after Trump on Monday extended a temporary reprieve from metal tariffs for the EU, Canada and Mexico until June 1, just hours before they were due to come into force.
While first-quarter corporate profits are expected to have notched their best growth in seven years, largely due to lower taxes, investors have focused on cost warnings from companies.
"I think a lot of data is pointing to 2018 being a peak from many points of view," said Mona Mahajan, U.S. investment strategist at Allianz Global Investors in New York.
"What's concerning is beyond this year, the momentum will slow. We're starting to see and what the market is starting to realize is a combination of perhaps the peak in momentum from earnings and economic perspective, combined with late-cycle rate-rising environment."
At 12:43 p.m. ET, the Dow Jones Industrial Average was down 266.30 points, or 1.10 percent, at 23,896.85, the S&P 500 was down 14.11 points, or 0.53 percent, at 2,633.94 and the Nasdaq Composite was down 4.18 points, or 0.06 percent, at 7,062.08
Archer Daniels Midland, one of the largest exporters of U.S. sorghum to China, said it would take a $30 million hit to its trading profit in the second quarter due to the U.S.-China trade dispute.
Nine of the 11 major S&P sectors were lower, with a 1.3 percent drop in the industrial sector the biggest.
The energy sector fell 1.2 percent on the back of a more than 1 percent drop in crude oil prices as the dollar remained near a four-month high ahead of the Federal Reserve meet.
Pfizer fell 4.3 percent, the most on the Dow, after posting its biggest miss on quarterly revenue in a year, on disappointing sales of some blockbuster drugs.
The technology sector was the lone gainer, up 0.3 percent as Apple jumped 1.5 percent ahead of its quarterly report after the bell.
Declining issues outnumbered advancers for a 2.16-to-1 ratio on the NYSE and for a 1.67-to-1 ratio on the Nasdaq.
The S&P index recorded one new 52-week high and 27 new lows, while the Nasdaq recorded 25 new highs and 66 new lows. (Reporting by Sruthi Shankar and Savio D'Souza in Bengaluru; Editing by Shounak Dasgupta)