* JPMorgan, Citi beat estimates but fail to excite
* Media stocks tumble for second straight day
* AT&T drops after Q3 warning, drags on telecoms
* Indexes: Dow down 0.02 pct, S&P off 0.07 pct, Nasdaq up 0.06 pct (Updates to early afternoon)
By Sruthi Shankar
Oct 12 (Reuters) - A rally on Wall Street paused on Thursday following lackluster quarterly earnings from JPMorgan and Citigroup and as media stocks dropped for the second straight day.
The two banks managed to beat profit and revenue estimates despite reporting a drop in trading revenue. JPMorgan fell about 1 percent, while Citigroup dropped more than 2 percent.
Bank of America and Wells Fargo, scheduled to report on Friday, were also lower, dragging the financials index down 0.39 percent.
"Not a huge reaction to earnings despite relatively healthy quarter out of the early reporters. The risk is similar to the second quarter in that stocks are being priced for perfection," said Bryan Reilly, senior investment analyst at CIBC Atlantic Trust.
"But the strength in the global economy has accelerated and a weakening dollar should set up companies for very healthy beats in Q3."
With the S&P 500 up about 14 percent in 2017, investors are betting on strong earnings growth to sustain the valuation.
AT&T tumbled more than 4 percent after the No. 2 U.S. wireless carrier said it lost 90,000 U.S. video subscribers in the third quarter due to intense competition and the impact of recent hurricanes.
That, along with a brokerage Guggenheim raising concerns over subscriber losses at Disney and Viacom, sent fresh jitters across a sector that was hit a day earlier by President Donald Trump's suggestion to challenge TV network licenses over 'fake news'.
At 12:36 a.m. ET (1636 GMT), the Dow Jones Industrial Average was down 3.94 points, or 0.02 percent, at 22,868.95, the S&P 500 was down 1.79 points, or 0.07 percent, at 2,553.45.
The Nasdaq Composite was up 4.16 points, or 0.06 percent, at 6,607.71.
The three indexes still managed to eke out new intraday highs in the session on gains in technology and industrial stocks.
Six of the 11 major S&P indexes were lower, led by a 2.39 percent drop in the telecom services index due to declines in AT&T.
The consumer discretionary sector lost nearly half a percent weighed down by media stocks.
Disney dropped 1.38 percent. Viacom sank about 3 percent after also warning that Charter Communications subscribers may lose access to its channels as the expiration looms for a distribution deal.
Charter fell 1.67 percent. Other big decliners included Comcast, which tumbled 3.4 percent.
A near 1 percent jump in Microsoft led the gains in the technology sector, the best performing among the 11 major sectors this year. Boeing's 0.5 percent rise helped the industrials.
Advancing issues outnumbered decliners on the NYSE by 1,481 to 1,289. On the Nasdaq, 1,408 issues rose and 1,380 fell. (Reporting by Sruthi Shankar in Bengaluru; Editing by Savio D'Souza and Sriraj Kalluvila)