* Health stocks hit after Amazon, JPMorgan, Berkshire team-up
* Bond yield rise again, while Apple continues to drop
* VIX hits highest level since Aug. 21
* Indexes down: Dow 0.87 pct, S&P 0.71 pct, Nasdaq 0.80 pct (Updates to open)
By Tanya Agrawal
Jan 30 (Reuters) - Rising bond yield continued to weigh on U.S. stocks on Tuesday, pushing the Dow Jones Industrial Average down more than 250 points, with pressure also being piled on by a drop in health companies.
Shares of healthcare-related companies fell after Amazon.com , Berkshire Hathaway and JPMorgan said they plan to form a venture aimed at lowering healthcare costs for their U.S. employees.
The S&P health sector tumbled 1.9 percent, the most among the 11 major sectors and set for its biggest one-day drop since October 2016, with all categories of companies dropping.
Health insurer UnitedHealth fell 4.3 percent, the most among Dow components, while Express Scripts' near 10 percent drop was the biggest on the S&P 500.
Pfizer shares fell 1 percent. They had risen about 2 percent in premarket trading after the company's quarterly results and full-year forecasts beat expectations.
U.S. Treasury yields surged to more than three-year highs on expectations that central banks globally will reduce stimulus as the economic outlook improves. A rise in yields makes borrowing cash more expensive.
More than the rise in yields, the pace of the increase is what could hurt equity markets, said Hussein Sayed, chief market strategist at FXTM.
"A simple question that may come to investors mind, is 'why would I remain in equities when two-year U.S. treasury bills can provide the same divided yield return of the S&P 500?'."
At 9:41 a.m. ET (1441 GMT), the Dow Jones Industrial Average was down 230.55 points, or 0.87 percent, at 26,208.93, the S&P 500 was down 20.52 points, or 0.71 percent, at 2,833.01.
The Nasdaq Composite was down 59.61 points, or 0.8 percent, at 7,406.89.
The CBOE Volatility Index, the most widely followed barometer of expected near-term stock volatility, hit a high of 14.69, its highest level since Aug. 21.
Among earnings, shares of Harley-Davidson dropped 6.7 percent after the motorcycle maker forecast a drop in shipments this year.
McDonald's was down 1.2 percent after the company's U.S. same-store sales failed to beat lofty Wall Street expectations.
MetLife dropped 8 percent after saying the U.S. financial regulator is looking into the insurer's failure to pay some workers' pensions.
Apple was down another 1 percent, still feeling the effects of news that the company will halve production of its $999 iPhone X smartphone.
Declining issues outnumbered advancers on the NYSE by 2,218 to 522. On the Nasdaq, 1,936 issues fell and 608 advanced.
The S&P 500 index showed 8 new 52-week highs and no new lows, while the Nasdaq recorded 11 new highs and 15 new lows. (Reporting by Tanya Agrawal in Bengaluru; Editing by Savio D'Souza)