January 30, 2020 / 6:28 PM / 2 months ago

US STOCKS-Wall St slides on China virus concerns, Facebook earnings

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* Facebook slides on warning of slowing revenue growth

* Tesla jumps after posting second straight quarterly profit

* Defensive sectors among gainers

* Indexes down: Dow 0.57%, S&P 0.70%, Nasdaq 0.77% (Updates to early afternoon)

By Sruthi Shankar

Jan 30 (Reuters) - U.S. stocks dropped on Thursday as the coronavirus epidemic raised fears of a further hit to China's economy, with weak earnings from Facebook and others adding to the gloom.

Shares of the social media giant dropped 6.5% after the company warned of slowing growth as its business matured and reported a surge in quarterly expenses.

The S&P communication services index fell 1.7%, the most among the 11 major S&P subsectors. Defensive sectors such as utilities and consumer staples, considered safer in times of economic uncertainties, posted slight gains.

The main U.S. stock indexes are on course for their second weekly declines as the outbreak has disrupted global travel and forced several companies to suspend operations in China.

The World Health Organization's Emergency Committee is due to reconvene on Thursday to decide whether to declare the virus, which has killed 170 in China and infected 8,100 people worldwide, a global emergency.

"It will have a material impact on GDP in China, but how much that resonates on a day-to-day basis, I don't know. We really don't know how long this will last," said Eric Marshall, portfolio manager with Hodges Funds in Dallas.

"Investors are taking a chance to make a quick check on valuation and it has reset sentiment. It's not as bullish as a couple of weeks ago."

At 1:00 p.m. ET, the Dow Jones Industrial Average fell 0.57% to 28,569.95.

The S&P 500 dropped 0.70% to 3,250.41 and the Nasdaq Composite was down 0.77% at 9,203.77.

Earnings expectations for S&P 500 companies have been improving steadily, with analysts forecasting a 0.7% rise in fourth-quarter profit, compared with a 0.6% decline estimated at the start of the season, according to Refinitiv data.

Microsoft Corp gained 2% after it beat expectations for quarterly earnings, driven by Azure cloud computing revenue growth.

Tesla Inc jumped 11% after the maker of electric cars posted a second straight quarterly profit as vehicle deliveries hit a record.

Altria Inc slid 5.4% after the tobacco company said it took another $4 billion charge on its investment in Juul Labs Inc. Package delivery firm United Parcel Service Inc dropped 5.6% after it forecast full-year earnings below estimates.

Declining issues outnumbered advancers for a 2.28-to-1 ratio on the NYSE and a 2.76-to-1 ratio on the Nasdaq.

The S&P index recorded 36 new 52-week highs and 14 new lows, while the Nasdaq recorded 40 new highs and 85 new lows. (Reporting by Sruthi Shankar and Medha Singh in Bengaluru; Editing by Anil D'Silva and Saumyadeb Chakrabarty)

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